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Prepaid credit and debit cards have no doubt gained popularity in America.  Offering the look and function of a bank debit card without the bank.

Americans spent about $65 billion on prepaid debit cards in 2012 according to CNBC, and that number has risen each year since.

For many, the idea behind using a prepaid card is an attempt to keep their spending in check.  With a prepaid card there is no worry about going over your limit… you can only spend what is on the card.

The biggest downside to using one of the many different prepaid cards available (American Express even has one now) is that you may get hit with higher fees than if you used a traditional bank account.

Is a prepaid card right for you?  Let’s take a look at some of the pros and cons of using a prepaid debit or credit card:

Pros:

Control your spending.  With a prepaid card you can only spend what is on your card, this can help with controlling your debt and help you with your long-term financial goals.

Security.  A prepaid card can be used to make purchases anywhere a “real” credit card can be used, this includes online.  Many people who are skittish about using their regular credit or debit card to make purchases online turn to a prepaid card.  Should someone hack your information, the most you could lose is what is loaded on your card.

Cons:

Cost.  If you are someone who runs up a lot of overdraft fees with your checking account, then you might actually come out ahead of the game.  But for the most part, the fees associated with prepaid cards can be high and numerous.  There are fees to load money on the card, fees per transaction and even fees to check your balance.  Not cards are alike, so be sure to shop around and compare fees.

No liability protection.  If your card is lost or stolen, you could be left holding the bag.  There is no FDIC regulation or protection and the cards that do offer theft protection do it voluntarily.

If you find yourself struggling with debt or would like to find out about becoming debt free, call Debthelper at 800-920-2262, or visit @ www.debthelper.com.