In my opinion, too many Americans continue to remain “unbanked.” Unbanked consumers are those which do not own credit cards, savings or checking accounts and the reason they don’t own these things is for one of two reasons:
- Their credit is too poor to obtain even a simple deposit account.
- For whatever reason, they choose to own any kind of bank or credit account and pay for everything in cash.
If your unbanked because of poor credit, the smart play would be to apply for a secured credit card. Secured credit cards require a deposit up front which is equal to your credit limit, then works as a normal credit card. Should you default on your agreement, the bank has your deposit as collateral so they’re covered.
The benefit of owning a secured credit card comes in building credit. Unlike prepaid debit cards, secured credit cards report to the three major credit bureaus and will help improve your credit score. After time, many secured credit cards allow you to change your account to an unsecured credit card and will subsequently refund your deposit.
And if you’re unbanked because you choose to be, then a prepaid card is a better fit for your wallet. Cash doesn’t work everywhere, as paying for things like utilities and airline tickets must usually be done online or with a credit card. Prepaid debit cards are a great way to stay out of the grid while having a payment method for non-cash purchases. The best prepaid debit cards can offer no fees and free ways to add money but the worst prepaid cards can be wallet sucks. Make sure to review all of the best choices before jumping in.
- Best Prepaid Debit Cards
- Best Secured Credit Cards