A prepaid debit card isn’t connected to your bank account. Instead, you buy the card from an authorized retailer, activate it, and then load money onto it.
Cash is king, but not everyone wants to carry a wallet full of cash wherever they go. You could always use a debit card or a credit card, but what if you don’t want to share your personal information with another financial institution?
A prepaid debit card may be the way to go. Learn more about how prepaid debit cards work and how they’re different from standard debit and credit cards.
What Is a Prepaid Debit Card?
A prepaid debit card, also known as a stored-value card, is a payment card that looks like a traditional debit card. The main difference between the two is that a prepaid debit card has money loaded onto it, while a debit card draws from the money you have in your bank account.
How Do Prepaid Debit Cards Work vs. Traditional Debit Cards?
When you use a traditional debit card, you’re spending money from your checking or savings account. If you don’t have enough funds to cover the transaction, your bank may allow the transaction, leaving you with a negative account balance. You may even have to pay an insufficient funds fee for the privilege of using your debit card to spend more money than you have in your account.
A prepaid debit card isn’t connected to your bank account. Instead, you buy the card from an authorized retailer, activate it, and then load money onto it. Some companies allow you to load money at the store, while others require you to use direct deposit, add funds online, or call a toll-free number.
Advantages of Using Prepaid Debit Cards
Prepaid debit cards have several advantages. One of the best reasons to use one is that you can’t overspend. If you load $100, you can only spend $100, so there’s no risk of overdrafting your bank account.
Carrying a prepaid debit card also makes it easy to pay for purchases. You can use a prepaid debit card just like a traditional debit card, eliminating the need to carry cash or buy merchandise with a credit card.
Some people avoid banks because they don’t want other people to see how much money they have. Others don’t qualify for bank accounts due to past financial challenges. For example, someone with a history of overdrafting accounts may not be eligible for a checking account with some institutions. Prepaid debit cards give the “unbanked” a way to participate in the economy without having a bank account.
Potential Challenges of Using a Prepaid Debit Card
Although prepaid debit cards have several benefits, you also need to be aware of some potential challenges. If you lose your card, you need to report it lost or stolen right away. Otherwise, the person who finds it may spend your entire balance before you even realize the card is missing.
Another disadvantage of using prepaid debit cards is that you don’t receive monthly statements. Some companies allow you to track your balance online, while others send text messages with your balance details. This makes it a little more difficult to track your spending.
Finally, you need to watch out for fees and service charges. Depending on which card you choose, fees and service charges may eat up a large portion of your balance. For example, some cards charge an activation fee, a monthly service fee, an inactivity fee, and a fee for every purchase you make.
If the activation fee is $3.95, the monthly service fee is $5, and you get charged $1 every time you make a purchase, you can easily use up a $50 card in one or two months. The more purchases you make, the faster your balance decreases.
Prepaid Debit Cards vs. Credit Cards
Although prepaid debit cards are similar to credit cards, there are a few key differences. For example, a prepaid debit card lets you spend money you already have. If you load $200 onto a prepaid debit card, you can spend $200.
In contrast, a credit card allows you to spend against a line of credit offered by a bank or another financial institution. When you make a purchase, you’re not spending your money—you’re spending the bank’s money. If you have a credit card, you have to make minimum monthly payments to keep your account in good standing.
Additionally, if you don’t make your credit card payment on time, the issuer may charge you a late fee. If the payment is late enough, they may even report you to the credit bureaus, causing your credit scores to decrease. If you have poor credit due to past late payments, start working to repair your credit to get your finances in order.
What is a prepaid debit card? These cards are similar to standard debit cards, with a few exceptions. Just like standard debit cards, you can use prepaid cards to make in-person purchases at most locations that take Visa or Mastercard. In many cases, you can even use these cards to make online purchases.
Instead of depositing money into an account at your local bank, you load money directly onto a prepaid debit card. Some cards also let you set up a direct deposit so you can have the funds from your paycheck directly loaded onto your card.
You can only spend up to the amount of money you have on your card. This may help prevent hefty overdraft fees that some banks and credit unions charge. However, most prepaid debit cards charge other fees, such as monthly maintenance and transaction fees.
Why Would You Want a Prepaid Debit Card?
There are many reasons you might want to consider purchasing a prepaid debit card. For starters, prepaid cards are often more convenient and safer than carrying cash around. These cards can be a good option for those having trouble getting a standard bank account or facing excessive overdraft fees.
Because prepaid debit cards only allow you to spend the value on your card, they can help you curb your spending and gain better control of your finances. It’s important to note that prepaid debit cards don’t help build your credit. They also don’t accrue interest no matter what your balance is.
How Can You Get a Prepaid Debit Card?
Prepaid debit cards are fairly easy to obtain. Many major retailers, such as Walmart and Target, sell these cards. Prepaid cards are also available through some banks and credit card companies. You may be required to provide proof of identification and incur a one-time activation fee.
When choosing a prepaid debit card, be sure to compare your options. Most prepaid cards charge a variety of fees, such as monthly maintenance and transaction fees. Be sure you understand all the costs involved when choosing the right prepaid debit card.
You also want to compare added features. For instance, if you want a prepaid card that allows you to have your paycheck directly deposited onto your card, make sure it offers this feature before purchasing it. Other features you may want to consider are the ability to link your bank account to your debit card so you can transfer money quickly or the ability to give a family member access to your account.
How Do Prepaid Debit Cards Work?
Using a prepaid debit card is pretty simple. Once you purchase the card, follow the activation steps before using it—keep in mind that you may incur a one-time activation fee. If you didn’t load money at the time of purchase, you must do so before using it.
Most prepaid cards allow you to add money by phone, online, or in person at the location you purchased the card. Depending on the type of prepaid card you purchase, you may also be able to set up a direct deposit to have your payroll check load directly on your card.
Once you have money on your card, you can make purchases at most locations that accept Visa or Mastercard, such as retail stores, restaurants, and grocery stores. You can also use ATMs to withdraw cash.
Additionally, you can use your card to pay bills or shop online. However, some cards require you to register your card before making online purchases. To register your card, you just need to follow the instructions that came with it.
Keep in mind that your purchases can’t exceed the balance on your card. For instance, if you try to purchase an item for $300 but only have $275 on your card, the transaction will be denied. The good news is that you won’t face any overdraft fees, and you can’t spend more money than you have available.
Pros and Cons of Prepaid Debit Cards
Before you purchase a prepaid debit card, it’s important to consider the advantages and disadvantages of using this card.
Pros of Prepaid Debit Cards
Reloadable prepaid debit cards have several great benefits, including:
Having an easy approval process that doesn’t require good credit
Serving as a convenient and safe alternative to carrying cash
Preventing overdraft fees
Keeping you from overspending so you can develop good spending habits
Being accepted at most places that accept Visa or Mastercard, including in-store and online purchases
Withdrawing cash from ATMs
Cons of Prepaid Debit Cards
These cards also have numerous disadvantages that you should be cautious of, including:
Numerous fees, including activation, monthly maintenance, transaction, and ATM fees
Not helping repair or build your credit
Not accruing interest no matter what your balance
Having the possibility of transaction and balance limits
Not being accepted by many hotels and car rental companies
Before purchasing a prepaid debit card, it’s important to understand its fees and limitations. Be sure to read the fine print so you understand exactly what fees you might incur while using the card. Additionally, read through the policies to see if the card includes any deposit, withdrawal, or balance limitations that may hinder your ability to use and save funds.
Because prepaid debit cards don’t help you build credit, you may want to consider applying for a credit card instead. Start by checking your Free Credit Score to see if you might qualify for a credit-building credit card.
If your credit score is too low to qualify for a credit card, a prepaid debit card may be a good solution while you work on rebuilding your credit. Credit.com’s Extra Credit® subscription has tools that can help you take steps to build your credit and track your success.
Many people send and receive funds via their checking account, the hub of their financial life. But not everyone has an account. In fact, an estimated 4.5% of U.S. households (approximately 5.9 million) were “unbanked” in the most recent year studied, according to the FDIC. This means that, in their household, no one held a checking or savings account at a financial institution such as a bank or credit union.
Not having a bank account can make it more challenging to send and receive money, but it’s not impossible. Here, you’ll learn how you can move funds around without a bank. Read on to learn:
• Key considerations before choosing a money transfer method
• What options are available for sending and receiving funds without a bank account.
What to Consider Before Choosing a Transfer Method
As with all financial services, you don’t want to rush and just go with the first method available. Each option you review will probably have its pluses and minuses. If you are trying to send or receive money without a bank account, do your research. Consider these important factors as you move toward making your decision.
Reliability
Reputation matters, always — and especially with something as important as money. You want to use services that have been around long enough to have a track record. You can start by asking your inner circle of friends and family to hear what they use. You can read online reviews as well at trusted sites. Key things to consider are whether money transfers were completed successfully, on time, and without excessive charges.
Transfer Cost
Without a bank account, you may not have the ease of, say, having your paycheck direct-deposited via Automated Clearing House (or ACH) or using a debit card. In fact, you may have to spend time and money to send or receive some cash. So read the fine print on the options you are considering to make sure you’re clear on the fee structure.
When it comes to how to transfer money from one account to another, what will you be charged for and what’s free? Will there be certain criteria to meet in order for a transaction to be done without fees? You don’t want any surprises.
Security
Security is critical. When it comes to cash changing hands, you want to feel confident about safety. You don’t want to risk your hard-earned dough getting stuck in the ether somewhere or vanishing entirely. Look into what layers of protection are in place, such as two-step authentication, data encryption, and an adequate privacy policy. Fraud and identity theft are rampant these days, so safeguarding financial information is a must.
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Options for Sending and Receiving Money Without a Bank Account
With all those factors in mind, here are specific options you may have to send or receive funds without a bank account involved.
Mobile Wallets
Here’s one idea for how to send money to someone without a bank account: mobile wallets, or digital wallets. These are smartphone apps where you can store your debit and credit cards. Apple Pay, Google Pay, and Samsung Pay are a couple of examples you may have heard of. These services offer a way to pay a friend without cash exchanging hands. Or you might receive funds. Some points to note:
• There are often no fees involved, and you may enjoy cash back and other rewards for completing a transaction with your linked card.
• Both the sender and receiver must have the same digital wallet for the transaction to be free. If you have PayPal or Venmo, your recipient needs to have them too in order to do a peer-to-peer or P2P transaction.
• Fees may apply when using extras like expedited transfers or paying by credit card, and mobile wallets in the US are often restricted to transfers within our country.
• Mobile wallets can get all sorts of information as you use them — your name, mailing and email addresses, mobile number, records of your calls and texts, your contacts and calendar, the unique ID number of your mobile device, account information, what you buy and where and for how much. Not everyone is comfortable with sharing all of that personal data.
Money Orders
Money orders may seem like they’ve gone the way of the dinosaur, but they still serve a purpose, including offering a way to send money without a bank account (or to someone who is unbanked). Some details:
• You get one from the post office or stores like CVS and Western Union, among others.
• They may not be the fastest way to send money without a bank account.
• The recipient will need to show identification to cash it.
• Prices vary depending on the service you use and how much money is sent, but they can be reasonably priced. For instance, at the post office, you may pay $2.10 for a money order up to $500 and $3.00 for one that’s more than $500, up to $1,000. By the way, money orders are typically capped at $1,000. You could buy multiple ones if you need to transfer more than that amount.
Credit Cards
If you don’t have a bank account to fund the transfer, know that some money transfer services allow you to pay by credit card. Then, your recipient will be able to pick up cash pretty much instantly. It’s easy and convenient, but it’s likely to be more expensive than other methods.
For example, Cash App allows you to use a credit card to send funds, but will charge you 3% of the transaction value, and then the credit card you’ve linked may also charge you interest or fees. This might not be your first choice if you have less pricey options available.
Prepaid Debit Cards
A prepaid debit card is another way to move money when a person doesn’t have a bank account. It shares some features of a credit card, debit card, and gift card.
• It is a debit card that’s been pre-loaded with money, and you can generally use it at any retailer (online or in person) that accepts credit cards.
• Prepaid debit cards may be associated with credit card networks; think MasterCard or Visa, for example. This means they can be used anywhere that accepts that kind of plastic.
• These cards may be riddled with fees. For instance, you might get hit with a fee for card activation, making a purchase, adding money to the card, and/or withdrawing money at an ATM. You’ll want to read the fine print because these fees may make prepaid cards a less attractive option.
Recommended: Alternatives to Traditional Banks
Cash or a Check
Cash is king and can be a super-simple way to send or receive funds, even if you don’t have a bank account, provided you can safely hand over the bills. If the two parties involved are in different locations, this becomes a lot riskier. Mailing cash is probably never a wise move.
Checks are also a time-honored way to transfer money; the person who receives it can then cash the check, perhaps paying a fee since they don’t have a bank account. But if you use mail to send the payment, a lost check situation can occur or a check might be stolen. So, there could be some risk involved.
Money Transfer Services
Money transfer services can be a godsend. No bank account is required for either the sender or recipient. It’s easy. In addition to in person retail outlets, you can now access money transfer services like Western Union and MoneyGram online.
• It’s a quick transaction; money can arrive as early as the same day.
• You have some flexibility, such as sending money transfers to a debit card or a mobile wallet.
• Pay attention to fees, though, as they vary and depend on the amount you’re sending and more. For example, if you use Western Union to send money to someone in Mexico, the fee could be anywhere from $4.99 to $26.49 or more, depending on the specifics.
The Takeaway
Having a bank account can be a cornerstone of good money management, but there are a number of Americans who don’t have one. If, for whatever reason you are without one or you want to transfer money with someone who doesn’t have an account, there are still ways to send and receive money. These include digital wallets, money orders, money transfer services, and other options. Some will have fees and security risks, among other downsides. Take your time to explore the safest, most convenient, and affordable choice for your situation.
If you are an account holder in this situation, you might also see what options your financial institution offers to simplify transfers.
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FAQ
Can I transfer money to someone without a bank account?
Yes, there are a number of options to transfer money if someone doesn’t have a bank account. These include using a money transfer service, prepaid debit card, mobile wallet, or money order.
What is the best way to transfer money to someone without a bank account?
What’s best depends on the two people involved. What are any time constraints, what is cost-effective, and what method is most convenient? Once these and other factors are considered, you can determine the best method, which might be a money transfer service, a mobile wallet app, a money order, or a prepaid debit card.
How much does it cost to send money without a bank account?
Costs vary depending on the method you use, the amount of money you’re sending, and whether it is being transferred domestically or internationally. While a domestic money order from the U.S. Postal Service will cost up to $3.00 for an amount between $500 and $1,000, you might wind up paying considerably more for other transactions.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
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With most of the year under our belt, the holiday season is just around the corner. No matter what you celebrate, this season is full of food, celebrating and spending time with loved ones.
While you’re hard at work prepping for the holiday season, scammers are too. A survey conducted by Experian found that a full 1 in 4. Americans have been a victim of identity theft or fraud in the holiday season. If you’re worried about scammers this year, don’t worry—we’ve got tips on how to look for holiday shopping scams this season.
When the pandemic hit in early 2020, COVID-19 scams became a popular method for criminals to get access to your information and steal your identity. However, the holidays are when these scammers go into overdrive, meaning it’s important to be extra cautious as you do your online shopping and holiday giving. Here are some of the most common holiday shopping scams to be aware of.
Illegitimate Charities
Many people use the holidays as a reason to be a bit more generous, but be careful before you make that donation. Many scammers create fake charities in an attempt to get you to donate. They get your money—and possibly access to your identity info—and no good ever comes from that generosity.
Check for social media presence, news stories, financial records and proof that any charity you’re considering donating to actually exists and has a good reputation.
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Fake Online Stores
Online shopping is a convenient way to check off all the items on your list without having to actually brave the holiday crowds. However, it’s important to ensure that the sites you’re shopping from are actually legitimate. Scammers create fake online storefronts—sometimes even mimicking well-known retailers—and you don’t know it’s fake until the merchandise never comes or you start seeing evidence of identity fraud.
Empty Gift Cards
Gift cards are the perfect choice if you’re not sure what someone on your gift-giving list wants or if they like to pick out items themselves. But selling gift cards that have a $0 balance or have already expired is a common and remarkably easy scam. This happens most often on local sales sites, such as Craigslist and Facebook Marketplace.
Email Scams
Have you ever gotten an email about something you bought online—but you never actually purchased anything from that retailer? Maybe the email said you needed to reset your password or gave you a link to track your package. These are phishing email scams designed to get you to enter your personal info so scammers can use it for identity theft.
Shipping Problems
One of the biggest worries that comes with online shopping—especially with the supply chain issues that have come as a result of the COVID-19 pandemic—is whether the gifts will arrive on time. Criminals capitalize on this fear by sending out emails, texts and other communications letting you know there’s been an issue with your package. You’re asked to provide personal information such as your address, credit card info and birth date to confirm your order, but all you’re really doing is giving scammers the information they need to steal your identity.
While the holidays are a common time for shopping scams, it doesn’t mean there’s nothing you can do about it. Learn what to look for and how to protect yourself from identity theft with these tips.
1. Pay Attention to Website URLs
Online searches can lead you to scammer-run websites that unleash computer malware or collect credit card numbers for identity theft. Carefully read website domain names. Watch for unfamiliar vendors or missing letters, misspellings or other tweaks to the name of a legitimate company. Pay special attention to the last letters. For example, tiffanyco.mn indicates a Mongolia-based website, not the legitimate website for Tiffany & Co., tiffany.com.
2. Make Sure the Site Is Legitimate
Before ordering, check the “Contact Us” page for a phone number and physical address and the “Terms and Conditions” link detailing return policies and such. Unlike legitimate vendors, bogus websites are less likely to post these—or they’ll provide them in a suspicious manner, such as via a faxed request only.
How do you know if a holiday website is legit? Check the Better Business Bureau as well as Facebook and Google reviews before you buy from a new place. If the business doesn’t have any social media or online presence other than the website, that’s a red flag.
3. Only Buy Gift Cards From Retailers
Buy gift cards directly from the retailer and avoid shopping for discount gift cards through local swap sites. You may also want to buy gift cards online or from the checkout instead of the display racks, which are less secure. Fraudsters can peel off stickers to glean gift card codes, replace them in envelopes and wait for an unsuspecting shopper to buy them. Once purchased and activated, they enter stolen codes at the retailer’s website to make online purchases—leaving the intended recipient with a useless card.
4. Look for HTTPS Sites
When buying online, check the URL to see whether the website starts with “http://” or “https://.” The “S” is for “secure” and is your best bet for safe shopping. Some legitimate retailers may use http sites, but your information is much more vulnerable to attack in this case because it’s easier for hackers to get to it. Even with a secure page, avoid using public Wi-Fi hotspots for online shopping or other financial transactions.
5. Use Prepaid Gift Cards for Online Shopping
Consider buying prepaid cards for online shopping instead of using your actual debit or credit card. These cards are often reloadable for ease of use, and if your information does happen to be stolen, hackers will only have access to the amount on the card and not your entire bank account.
6. Take Care on Craigslist
On Craigslist or when answering local classified ads, deal only with sellers who provide a phone number you can verify. Don’t rely solely on email correspondence. Assume any request for wire-transfer payment is a scam, and be suspicious of prepaid debit card transactions. Using PayPal or a credit card is your safest bets.
7. Avoid Deals That Seem Too Good to Be True
Stay clear of prices from private sellers that seem too good to be true or are tied to hard-luck stories, such as a need to sell quickly because of divorce or military deployment. No one is selling the latest gaming console for only $50, no matter how hard up they are. These are common scams to get advance payment—and you’ll likely get no merchandise.
8. Don’t Open Holiday E-Cards From People You Don’t Know
Delete E-Cards or general holiday emails if you don’t know the sender. These mass-sent greetings likely contain malware. Legitimate card notifications should include a confirmation code to safely open the card at the issuing website.
9. Beware of Undeliverable Package Emails
Avoid emails claiming that FedEx, UPS, DHL or the U.S. Postal Service has an undeliverable package with links for details. The links will install malware that can log keystrokes to steal computer files and passwords. Unless you previously provided an email address, courier services won’t contact you this way. This scam baits you to call for details—at which point you’ll be tricked into making an expensive overseas call or revealing your personal and financial information. Look up the callback number yourself if you’re curious.
Gearing up for the holidays? Go ahead and enjoy your holiday shopping this year. Just be a little careful—keep an eye out for anything suspicious and make sure that any website you buy from is legitimate.
If you’re worried that you might already be a victim of identity theft or just want to keep a closer eye on your credit, ExtraCredit can help you know what’s going on with your credit report and spot identity theft as soon as it happens.
Many people use the terms ATM card and debit card interchangeably, but these aren’t actually the same thing. To understand whether an ATM card is also a debit card, you have to know a bit about the history of these cards and what they’re used for.
We’ve got the details on ATM cards vs. debit cards below. Find out the difference and get answers to some common debit and ATM questions.
What Is the Difference Between ATM and Debit Cards?
ATM and debit cards look quite similar. They resemble credit cards and typically have bars you can swipe. They may also have secure chips. However, they aren’t the same and don’t serve the same purpose.
If the question is which came first, the ATM or debit card, the answer is ATM card. According to a report from the World Economic Forum, the patent for an early cash dispenser was filed back in 1960. ATMs became operational later that decade, along with automated teller machine cards—ATM cards. The first official debit card didn’t debut until 1972. It was called the ATM account debit card from City National Bank of Cleveland.
ATM cards were originally designed to do one thing. Instead of going to the bank to get money, you could take cash out of your checking account via a machine. These machines were connected by regional networks. While the cards were issued by banks, they could be used to withdraw money anywhere there was a machine for a potential fee.
As such, ATM cards are cards that are only used to interact at ATMs. Debit cards, on the other hand, have a wider function.
In the past, ATM networks began looking for new revenue streams. They started creating relationships with retailers and eventually joined forces with the credit card networks to create what we now know as debit cards. Debit cards can be used like credit cards at checkouts in person and online.
Most banks also issue debit cards that can act as ATM cards. However, an ATM-only card can’t act as a debit card. Debit cards have Mastercard or Visa logos on them, indicating which network they run on. ATM cards don’t have these logos.
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Pros and Cons of an ATM Card
Some banks will still issue an ATM-only card if an account holder asks for one. These cards can only be used at automatic teller machines.
Pros of ATM cards include:
You can get cash at any machine, creating flexibility for money management.
You can’t swipe the card to pay for goods and services, which can help reduce impulse purchases.
They may be a good tool to go along with a cash envelope budget system.
The main disadvantage of an ATM card is its limitation. You can’t use it to pay for goods and services. If you don’t have another payment method in your wallet, this can lead to you having to find an ATM and get cash anytime you want to purchase something.
Pros and Cons of a Debit Card
Most checking accounts come with the option for a debit card, and some banks issue one automatically. You can also get prepaid debit cards.
Pros of debit cards include:
Flexibility, as you can use your card at ATMs and pay for goods and services with it anywhere Visa or Mastercard is accepted
You may be able to swipe your debit card as a credit card for added protection
Options for managing your budget, as you can set limits on your debit card or get a prepaid debit card that limits how much you can spend
They’re a common and recognized financial tool that won’t raise eyebrows when you use them
The biggest con of a debit card is that it’s tied to your bank account. This can lead to impulse spending that brings your account balance low, even if you didn’t budget for the spending. You may also find your debit card is limited by daily or individual purchase amounts.
FAQS
Can you use ATM cards at all ATMs?
Yes, you can generally use an ATM card at any automatic teller machine. This means you don’t have to look for an ATM that’s associated with your financial institution.
Are there fees for using different ATM cards at different brand ATMs?
Yes, there are fees for using ATM cards that aren’t associated with your financial institution or bank. Your bank might charge a fee for this activity, and you may also pay a fee to the ATM company.
What happens when an ATM transaction fails?
ATM transactions can fail for a few reasons. When they do, the machine notifies you of the failure and the reason. Some common reasons include:
You don’t have enough money in your account to cover the withdrawal.
The machine experienced a malfunction and couldn’t complete the process.
You entered an incorrect PIN.
Your card couldn’t be read by the ATM reader.
In cases where a technical malfunction or incorrect PIN entry caused the transaction to fail, you may be able to try again.
Are there any limits to how much can be withdrawn with debit and ATM cards?
Yes, banks set limitations on how much can be withdrawn with debit and ATM cards. There may be a limitation on how much you can withdraw in a single transaction. Daily limitations also usually exist. For example, your bank may only allow you to withdraw $300 at a time or $1,000 in a single day. No standards exist for these limitations—each financial institution decides for itself.
Which Is Right for You?
Ultimately, you have to decide whether an ATM or debit card is right for you. Take into account your own budget and the way you spend money. You should also consider what financial habits you need support for and which type of card would help.
The pandemic has led to job losses for many Americans, with 712,000 unemployment filings for the week ending March 6th. If you’re one of those filers, you may receive your payment automatically, but it can still help to know how the process works.
But if you haven’t received your extra unemployment payment yet, it can help to know that it varies by state. Most states have already begun processing unemployment payments, but it still could take some time. If you’re still waiting for your extra unemployment, here’s what you need to know.
What’s Ahead:
The first thing you’ll need to determine is whether you even qualify for a payment. You’ll have to currently be unemployed and receiving benefits to get the $300 payment automatically issued. But if you were unemployed between March 29, 2020, to March 13, 2021, and your benefits ran out, you may still qualify for unemployment compensation through the Pandemic Emergency Unemployment Compensation (PEUC).
If you haven’t applied for unemployment already, you’ll need to do so as soon as possible to be eligible for the extra payment. You don’t have to be unemployed due to COVID, but you do have to meet your state’s eligibility criteria for unemployment payments. If you qualify for unemployment in your state, you’ll qualify for any extra payments being issued.
Who will get the payment automatically?
If you’re already receiving unemployment benefits, you’ll receive the extra $300 payments automatically through September 6th. This is an extension of the previous $300 extra weekly payments that were set to expire on March 14th. The payments are retroactive to December 27th, so if yours is running late, you’ll still be paid for what you’re missing now. The maximum PEUC you can receive is now 53 weeks, which is more than double the previous limit of 24 weeks.
But there are some people who won’t get those payments automatically. If your unemployment benefits have run out, you’ll need to apply specifically for the PEUC program. If your benefits are on the verge of ending, you’ll have to wait until your benefits are exhausted to apply for PEUC. Once you’ve applied and been approved, you’ll go through the same weekly filing process you went through when you were on unemployment.
What happens if your unemployment ran out months ago and you were relying on PEUC last year? You’ll have to reapply for the PEUC program.
Unemployment relief for the self-employed
What about the many unemployed Americans who work for themselves? The Pandemic Unemployment Assistance (PUA) program is designed to issue $300 weekly payments to the many contract workers that are having a tough time finding work. Those include freelancers, part-time workers, gig workers, and other independent contractors who aren’t usually eligible for unemployment.
If you qualify for PUA, you’ll need to apply through your state’s unemployment office. Be prepared to submit documentation verifying that you’re eligible for assistance. To qualify, you need to be able to demonstrate that you are self-employed. This verification could include documents like tax returns, a business license, or client invoices.
Unemployed workers who combine freelance work with a W-2 job could qualify for an additional $100 each week. If you think you meet the qualifications, contact your state unemployment office for instructions.
Once it’s started, you may wonder how long you can expect the payments to keep coming. The extra $300 was originally scheduled to continue through March 14th. But it’s retroactive to December 27th. The newly-signed bill extends the extra relief through Labor Day of this year
Freelancers who qualify for PUA will also get the extra money a little longer. The American rescue plan also extends PUA benefits through Labor Day. However, the maximum unemployment benefits you can receive as an unemployed freelancer is 79 weeks. If you live in states with high unemployment rates, that may be extended to 86 weeks.
Unless a bill extending the extra unemployment is passed, on the cut-off date, you’ll resume receiving your standard unemployment benefits until your unemployment runs out. Currently, no extra compensation is planned after September 6th.
Do I have to be actively seeking employment?
The usual rules of unemployment still apply. You’ll need to be actively looking for work while receiving unemployment benefits even during COVID. But how you’ll demonstrate this varies from state to state. In some states, you’ll simply sign a statement saying you’re looking for work, while others will require you to provide contact information for the places you’ve applied.
However, there are some COVID exceptions to this general rule. If your business closed or reduced operations due to the pandemic, you might not have to prove that you’re looking for work. But this only applies if your employer has promised to call you back into work when the business resumes normal operations.
How will the payment be issued?
If you’re receiving unemployment compensation, the $300 will be added to your weekly benefits. In many cases, this is by direct deposit, but some recipients get their money via debit card or paper check. If you want to change the way your benefits are paid, you can usually do this through your state unemployment office.
For those who aren’t receiving unemployment compensation, PEUC is typically paid one of two ways: direct deposit or prepaid debit card. The unemployment office will use the last method of compensation to deposit your PEUC funds. If you received your previous payments by debit card, the funds will be deposited to that card unless you request direct deposit when you sign up for PEUC.
One great option for direct deposit is Chime®. Once you have an account, you can direct your unemployment benefits to go directly to that account. Chime will even give you access to your funds as much as two days earlier than what they’d normally be available with direct deposit.3 So if you’re eager to get it, this could be a way to consistently receive those weekly payments a couple of days early.
3 Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
What happens if my work fluctuates?
COVID has complicated things for some workers. With lockdowns and restrictions varying, you may be called back to work, only to be laid off again a few weeks later. But if you’re receiving unemployment benefits, you may need to reach out and let your unemployment office know. In some states, you simply have to stop certifying every week and your benefits will expire.
If you’re called back to work and laid off again, there is some good news when it comes to unemployment benefits. You can pick up your unemployment benefits where you left off. This includes the extra benefits you’re receiving. You’ll continue to get benefits until you’ve exhausted the number of weeks you’re eligible to receive them or you reach the cutoff date.
Summary
Extra unemployment compensation has helped unemployed workers make it through a tough economic time. As things gradually return to normal, hopefully, unemployment claims will drop and there will be no need for a further extension of extra unemployment benefits.
In the meantime, it’s important to check with your state unemployment office to determine what unique requirements apply to your own unemployment claims.
A secured credit card is similar to a traditional card, but it’s backed by a cash deposit that lenders use as collateral.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
A secured credit card is backed by a deposit, which enables lenders to provide secured credit cards to people with no credit history or bad credit. You can build your credit with a secured credit card by using the card regularly, paying off the full balance each month and keeping your credit utilization low.
Read on to learn more about what a secured credit card is, how it works and how you can use one to improve your credit.
What is a secured credit card?
A secured credit card is similar to a traditional card in most respects, except that the card is backed by a cash deposit that lenders use as collateral.
While not all lenders readily offer credit cards for people with bad credit or no credit, a secured credit card is considered lower risk since you are essentially borrowing money from your own cash deposit. If you don’t pay your bill, the lender can simply use your deposit to pay off the balance.
Here are a few key points to keep in mind with secured credit cards:
Credit limit: The credit limit for a secured credit card is usually equal to the amount of cash you provide as a deposit.
Annual percentage rate: The annual percentage rate (APR), or the interest that you’ll accrue by not paying your full balance each month, is typically higher on a secured credit card.
Goods and services: Similar to a traditional credit card, a secured credit card can be used to pay for goods and services, including many bills.
By using a secured credit card with good credit habits, you can build or improve your credit history to help yourself get a better credit card or a loan.
What is the difference between a secured and an unsecured credit card?
The difference between secured and unsecured credit cards is that an unsecured credit card requires no deposit or collateral to open, while a secured credit card does. Think of your cash deposit as “securing” the credit you’ll use to make purchases.
How does a secured credit card work?
When considering secured vs. unsecured credit cards, you should know that a secured credit card works fundamentally the same way as an unsecured card, though it also has some unique features. Here’s how it works:
Once your application is approved, your secured credit card requires a cash deposit.
Your purchases are essentially backed by your deposit, which reduces risk for the lender.
Payments made on the card don’t actually come out of that deposit—you’ll still pay your credit card balance out of your own money every month. Missed payments will still incur interest.
You can make payments on a secured credit card the same way you would any other credit card.
This option is especially useful for those looking to use a credit card to build credit.
As long as you pay off your balance, the deposit will be returned to you when you close the account. But if you don’t make payments on time, the deposit acts as collateral, and the lender will keep the deposit to pay what you owe.
Do secured cards build credit?
If you’re looking to improve your financial history, it can help to use a secured credit card for bad credit repair. They can also be a great option for those who want to get a credit card with no credit. Note, however, that in order to build your credit, you will still need to make on-time payments every month, because a missed or past-due payment can have a negative impact on your credit.
How long does it take to build credit with a secured credit card?
According to FICO, one of the primary credit score providers, new credit lines account for 10 percent of the score they give you. Building credit from scratch can take up to six months, and if you already have credit, it can take many months of consistent, on-time payments on your secured credit card to help boost your credit.
How to get a secured credit card
Secured credit card applications aren’t very different from unsecured credit card applications. If you decide this is the right choice for your credit-building strategy, the process should look something like this:
Step 1. Shop around
Start by looking for secured credit cards with no annual fees—or, if necessary, a low annual fee. If you’re concerned about affording the deposit, you may want to look for options with below-$100 minimums. It’s also worthwhile to prioritize cards with the lowest APR possible in case you need to make partial balance payments.
Step 2. Apply for the card of your choice
Applications can usually be completed online in just a few minutes. You’ll likely need to provide basic personal information like your address, phone number, Social Security number and income.
Step 3. Make an initial deposit
To open your account, you’ll need to make a deposit of no less than the approved minimum. This will either be the same amount or a little less than your credit line.
Step 4. Make additional deposits if desired
Your lender may permit you to make additional deposits to raise your credit line even higher.
Step 5. Make monthly payments
As with any credit card, you’ll need to continue making on-time payments—ideally in full, if possible—in order to maintain good standing and build up your credit.
Banks that offer secured credit cards and secured credit card examples
Most of the major national banks, credit unions and credit card companies offer secured credit cards, including Bank of America, Citi, Wells Fargo and more. Here are a few examples of popular options:
No credit history needed: The Citi® Secured Mastercard® has no annual fee, offers a 22.74 percent APR and requires no credit history for application.
Cash back: The Discover it® Secured Credit Card carries no annual fee, comes with a 23.24 percent APR and offers 1 percent cashback on all purchases plus an extra 1 percent on gas station and restaurant purchases.
High credit limit, low APR: For those who can make a $500 security deposit, Capital One’s Platinum Secured Mastercard® offers up to a $25,000 credit limit with no annual fee and with a 9 to 18 percent APR.
Credit union: Digital Federal Credit Union’s Visa® Platinum Secured Credit Card boasts an 11.5 percent APR and no annual fee but does require membership in the credit union and a $500 deposit.
How to use a secured credit card to rebuild credit
Once you have a secured credit card, you can begin using it to build or improve your credit, which could ultimately lead you on a path to a high credit score and the opportunity to get a car loan or mortgage. Here are a few tips for using your card effectively with the goal of building up credit.
Make sure your card issuer reports to the credit bureaus
There are three major credit bureaus that keep track of your credit history, so you’ll want to be sure your credit card issuer is reporting your payments so you can build your credit. Check the credit card agreement or call the card’s issuing financial institution to check before you apply.
Use your card regularly
Your card will only make an impact on your credit reports if you use it, so you’ll want to make regular purchases with it. However, it’s important to use your card responsibly, so aim for manageable purchases like groceries or small bills.
Keep your credit utilization low
One of the factors affecting your credit score is credit utilization, which is the ratio of available credit to credit you’re actually using. A low ratio suggests to creditors that you are a low-risk borrower, which can increase your score. We recommend using under 30 percent of your total available credit and paying off anything above that as quickly as possible.
Pay off your full balance every month
An important part of managing a credit card is paying off the full balance every month, which helps you avoid paying any interest or falling behind on payments. A late or missed payment can lead to a negative item on your credit reports.
Secured credit card vs. prepaid debit card
On the surface, a secured credit card may seem like the same thing as a prepaid debit card. However, there are a few key differences:
Credit history: Debit cards do not contribute to your credit history, while credit card payments do.
Deposit collateral vs. prepaid cash: A secured credit card does not actually use your deposit to pay your balance—unless the lender needs to use it as collateral for a missed payment. Prepaid debit cards draw from the deposited cash any time they are used to make payments.
Frequently asked questions
Why would someone use a secured card?
People with no credit history or a low credit score may use a secured credit card in order to build or rebuild their credit. This option can be easier to get for those without a strong credit history.
Do I get my deposit back from a secured credit card?
If your deposit isn’t used as collateral for a missed payment, you will get your deposit back when you close your account.
What is an unsecured credit card?
An unsecured credit card is simply a credit card that does not require a deposit to open.
Do secured credit cards build credit?
Secured credit cards do help users build credit if they are used responsibly. Regular, on-time payments help build credit. Missing payments on a secured credit card will still likely hurt your credit.
Who should consider using a secured credit card
Overall, secured credit cards offer an excellent way to build credit, especially for those who have no credit history or poor credit. However, once you’re able to qualify for a regular credit card, it’s often beneficial to do so, though you may want to consider consulting your financial institution first to make sure. Regular credit cards offer better interest rates and credit limits, and many also offer more cashback reward options.
If you’re looking to get a secured credit card to fix your credit, make sure to take a close look at your credit reports for any inaccurate information that could be bringing down your score. If you need assistance formulating a solid credit repair strategy, consider contacting the consultants at Lexington Law to get help addressing inaccurate or unfair negative items on your credit reports.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Vince R. Mayr
Supervising Attorney of Bankruptcies
Vince has considerable expertise in the field of bankruptcy law.
He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.
Financial literacy can be boiled down to one basic concept: Just save more money than you spend. Easy-peasy, right?
Yet, only 57% of Americans are financially literate, per the S&P Global FinLit Survey. And you can’t afford to be among the 43% that don’t make the grade. According to a study by the National Financial Educators Council (NFEC), lack of personal finance knowledge cost each American an average of $1,389.06 in 2021.
This isn’t due to incompetence, of course. Unfortunately, the term “financial literacy” comes with all kinds of condescension — as if those who don’t qualify are utterly clueless when it comes to cash. And there are plenty of stereotypes attached, like that financial literacy equals wealth. And vice versa.
But so-called “financial literacy” is dictated by numerous factors: from access to financial education and banking services in your community to generational wealth or financial trauma. And let’s get real: there’s a lot of jargon in the finance world that can make the savviest of us feel like we have no idea what we’re talking about when it comes to our own money.
All this to say, that even if you are among those dubbed “financially literate,” you probably know how to manage your money, but you probably also realize there’s a lot still for you to learn. So, how much do you really need to know? Let’s break down the basics with a bit of financial literacy 101.
What’s Ahead:
What Is Financial Literacy?
Financial Literacy Definition
Financial literacy is the combination of knowledge, skill, and confidence needed to use money in sound and healthy ways.
Note that I didn’t include “access to money” in that list. That’s because having wealth doesn’t necessarily make you more financially literate, and not having money doesn’t make you less so. Traditionally, any talk of financial literacy has assumed you have a certain base level of money in the bank, but that’s simply not true.
Let’s keep it simple: If a stranger puts a dollar in your hand, do you know exactly what to do with it? If you do, then you can count yourself as financially literate. Which means, no, you don’t need to know what an ETF is or how to buy bitcoin. And even if you’re living paycheck to paycheck just to cover your food and rent, but you know how to make it work — that’s financial literacy.
After all, there’s a big difference between knowing what to do and being able to do it. And so, if some of these are out of reach for you right now, that doesn’t mean you’re financially illiterate.
Financial literacy means you can check off the following:
You know to pay your bills on time because late fees are expensive, they hurt your credit score, and they just generally make you angry.
You know to spend less than you earn.
You understand how compounding interest on your savings/investments can set you up for retirement.
You understand how compounding interest can be used against you through subprime loans.
You’re allergic to overpaying for products or services.
You’re just generally awesome at adulting, no matter your income.
Why Is Financial Literacy Important?
You might say I’m passionate about this topic. Full disclosure: I literally wrote a book about my own financial metamorphosis, called The Frugalista Files: How One Woman Got Out of Debt Without Giving Up the Fabulous Life.
Once upon a time, I too was among the financially unlettered. Sure, I had a decent job, and I knew how to pay my bills on time. But I had too many bills and too little savings.
I didn’t consider myself financially literate until I realized that the little decisions I made daily determined my financial future and, quite honestly, the course of my life.
The same applies to all of us. Either we figure out a plan for how to thrive or we won’t survive. Financial literacy is a non-negotiable.
Financial literacy doesn’t mean your finances are perfect. However, it allows you to at least manage the imperfect parts.
Basics of Financial Literacy
While the fundamental ‘save more than you spend’ essence of financial literacy seems simple enough, there are some foundational skills and concepts that you need to master in order to truly pull it off.
Budgeting
“A budget is a plan you write down to decide how you will spend your money each month,” according to Consumer.gov, a site by the Federal Trade Commission.
Understanding your personal cash flow is an essential component of financial literacy. Every dollar that you earn should be accounted for so that you don’t end up wasting money on things that you don’t need. Budgets help you to control and organize your spending and provide a framework for your income.
A good budget covers housing expenses, food, debt repayments, savings, and yes, discretionary spending. We are social creatures, and we need fun.
Some people think of budgets as restrictive, but they don’t have to be. Instead, treat your budget as the financial roadmap that you need to travel through life. You wouldn’t take a road trip without directions, would you? Don’t move through life without knowing exactly where your money is going.
Read more: How to Make a Budget — Our Step-By-Step Guide to Managing Your Money
Saving and Emergency Funds
Sometimes “life happens.” An emergency fund is a stash of savings reserved for when something goes awry.
Think of that time you got hit with a surprise tax bill. Or when you were freelancing and your main client unexpectedly shut down their business. Your emergency fund should be enough of a cushion to keep you financially stable when you face these unexpected expenses or periods of low income.
How much is enough? Play around with an emergency fund calculator for a ballpark figure of what you need to save given: A. Your approximate monthly expenses; B. Your existing savings; and C. The estimated time it would take for you to replace your usual income if it’s cut off.
If you’re at the beginning of your savings journey and the amount you have left to save for a fully-stocked emergency fund is overwhelming, take a deep breath. Start small by putting $1,000 into an account you only touch for true, must-handle crises, and then gradually grow the fund month by month.
FYI, new video games or the latest Yeezy drop don’t count as emergencies, cool? Acknowledging that simple fact already makes you more financially literate than many of your peers!
Read more: Everything You Need to Know About Emergency Funds
Debt
Debt is money you owe to someone else. It’s typically subject to compounding interest, i.e., a sum of money you must pay to the lender in addition to the amount of money you’ve borrowed. The lower the interest rate on the debt, the less the borrower will pay overall. The higher the interest rate, the more money the lender stands to make.
In some cases, taking on a sustainable amount of low-interest debt can be a financially literate move. You might need to borrow money to pay for an essential expense that facilitates your career goals, like a car or a college education. Or you might borrow money to pay for a large asset that will appreciate in value, like a home.
However, using debt to pay for daily expenses on a credit card, and then carrying an unpaid card balance from one month to the next, can lead to a ruinous, unending cycle of debt.
Financially literate people know when to acquire debt and when to shun it. They work diligently to pay off their debts because they understand that high balances can hurt their credit scores and their ability to save.
Read more: How to Get Out of Debt — a DIY Guide
Investing
Investing is buying an asset in anticipation that it will increase in value and provide financial returns. It’s how you put your money to work for you and achieve wealth.
Conversely, an asset you purchase can also decrease in value, so there’s always a degree of risk involved. But some investments are less risky than others. Bonds can be a relatively low-risk investment, whereas buying crypto is highly speculative.
Financially literate people recognize the importance of investing and aim to have part of their discretionary income tied up in investments.
They also diversify their investment profiles and only invest money that they can afford to potentially lose. They do their research before spending one dollar on an investment. They know their risk tolerance and allocate assets appropriately.
Read more: Essential Advice to Help You Start Investing
How to Improve Financial Literacy
Improving your financial literacy is like anything else that you want to master — you need to work at it every day. When I wanted to become smarter with my money, I started reading reputable personal finance blogs, news articles, Twitter feeds, and books. Financial podcasts can be a great source of knowledge as well. No two people have the same finances, so you need to consume lots of different material to figure out what works best for your situation.
Focus on money management — budgeting, saving/building an emergency fund, and repaying debt — at the beginning of your financial literacy journey. When you’re comfortable with those elements, start to devote more time to building your investment plan. There are a lot of scammers in the financial world, so avoid any get-rich-quick schemes like the plague. If it sounds too good to be true, it is.
As you become more sophisticated and confident in your financial knowledge, you might pair up with a fee-only certified personal financial advisor to help you navigate the investing world. And even when using a financial advisor, you still have to keep abreast of how your portfolio is performing. The more you work at financial literacy, the luckier you become.
Read more: Should I Get a Financial Advisor?
Financial Literacy Quiz
One of the best steps you can take toward improving your financial literacy is to test your knowledge. You don’t know what you don’t know, but a test will certainly show where you need to tighten up on the money front!
Should Financial Literacy Be Taught in Schools?
Educators might understandably resist the notion of adding a separate financial literacy class to already-packed school days. But financial literacy is clearly a must-have skill for everyone, and we’d be hamstringing our youth by excluding it from their education.
Here’s an idea: Instead of a dedicated financial literacy class, why not incorporate short financial literacy lessons into existing classes, at all ages, starting from first grade?
Kids can play around with the fundamentals of budgeting as soon as they learn to add and subtract.
When older students learn about supply and demand in their economics course, it’s typically taught to them as a matter of commodities and products. Why not relate the concept to human resources and an individual’s professional market value?
I remember talking to a group of bright high school students who balked at the idea that a prepaid debit card sponsored by a popular celebrity wasn’t a good financial move. To these kids, prepaid debit cards were financial saviors. After all, their celebrity hero told them so.
What if their English class had emphasized that the wizard in the Wizard of Oz was just marketing and no substance? And that self-professed miracle workers — and the products they shill — might not bear close inspection?
Had they been properly armed with critical thinking skills, the students I met might have dug a little deeper into the realities of prepaid debit cards before they signed up for them. They likely would have discovered that prepaid cards typically cost too much money to maintain over time and do absolutely zilch for credit scores.
Final Thoughts
I wish I could sincerely tell you that personal finance is as easy as spending less than you make, but it’s of course a tad more complex than that. Our lives and our finances are too fluid to be governed by hard-and-fast rules.
Yes, you always want to increase your savings. Yes, you always want to repay debt. But there are exceptions to every ‘always.’
For instance, you shouldn’t save money at the expense of getting necessary health care procedures to save your life. Nor should you spend all your savings on paying off your student loan debt and then be forced to run up a high-rate credit card to pay for life’s emergencies.
These kinds of financial dilemmas pop up for everyone, and they’re too numerous to cover in this article. But that’s where the literacy part of financial literacy comes into play. Literacy of your own financial status and aspirations will guide you through the day-to-day choices that take up the bulk of your financial brainpower. Turning to the wealth of personal finance resources you have at your fingertips will help you with the less intuitive decisions that pop up along the way.
Opening a bank account for your teen is a great way to begin teaching financial responsibility and money management. If your teen’s account is linked to yours, it’s also a convenient way to pay them an allowance, reward them for good grades, or even transfer money for pizza when your teen is out with friends.
It’s no wonder a recent Fidelity study reported that 49% of teens in the U.S. have opened bank accounts. But which checking account is best? And what should you look for in checking accounts for teens?
10 Best Teen Checking Accounts
While there are many options available for teen checking accounts, parents frequently choose to establish accounts for their teens at their own primary banking institutions. This list includes many top national banks.
Their inclusion isn’t necessarily due to their teen checking accounts offering the highest interest rates or the most features. Instead, their comprehensive services for adults and strong reputations make them a viable consideration.
1. Copper Card
Copper Bank, Member FDIC, is a federally insured online bank dedicated to helping kids and teens learn how to manage money. Copper Bank has invested more than $1 million in high school financial literacy and the app helps teach kids the basics of investing.
Copper accounts are available to kids ages 6 and up, as long as they have their own mobile phone number separate from the adult account holder. Children and teens receive a Copper Spending Account debit card that is compatible with Google Pay and Apple Pay. Users can also use the debit card for fee-free transactions at 55,000+ ATMs nationwide.
Copper offers a ton of enticing features parents and teens will love. First, there are no overdraft fees, no minimum balance, or maintenance fees. Parents will pay a small fee of 2.5% + 30 cents of the total transaction for an “instant transfer” from a linked debit card. Otherwise, it can take 3 to 5 business days for funds to arrive in the Copper account.
Copper makes banking convenient for parents and rewarding for kids. Parents can set up automatic transfers for allowance, or can even transfer money automatically when the Copper account drops below a specific number.
Copper lets kids round-up their debit card transactions to be automatically transferred into their linked savings account. Users can set specific savings goals and earn interest with up to 5% annual percentage yield. This can motivate kids to save as they watch their money grow.
Copper also allows kids and teens to invest, starting with as little as $1. Investing is automated based on your child’s risk profile, and Copper even reinvests dividends and uses dollar-cost averaging to set your child up for investment success and good habits for life.
2. USAA Youth Spending Account
USAA offers a joint account that a parent or legal guardian can open with a child of any age. The USAA Youth Spending Account includes a debit card that allows the adult account holder to increase or decrease daily spending limits. Children can use their card at point-of-sale transactions and without fees at any of 100,000 preferred ATMs in the USAA network.
Once the child turns 13, you can use the mobile app to give them the ability to transfer money, make remote deposits, and more.
When your child turns 18, the USAA Youth Spending Account will be converted automatically to a USAA Classic Checking account. You can choose to stay on as a joint account holder to help your teen manage their money while they are away at college or in the military.
The USAA Classic Checking account has no monthly fee for college students or members of the military.
There are a few things to be aware of before you open the banking account:
USAA is available only to veterans, active duty military, national guard, reservists, military spouses and others who meet a few criteria related to the U.S. Armed Forces
The USAA Youth Spending Account requires a $25 minimum opening deposit
Your child will earn .01% annual percentage yield if they maintain a daily balance of $1,000 or more
3. PNC Bank Student Banking
PNC Bank offers a VirtualWallet student account for teens and young adults ages 16 and up. Teens under 18 will need to open a joint account with a parent or legal guardian. College students may have to show proof of enrollment. After six years, the student account becomes a regular PNC Bank Virtual Wallet account, with all the same features and benefits.
The Virtual Wallet account includes a “Spend” primary checking account, a “Reserve” savings for short-term savings and a “Growth” account for long-term savings for big ticket items or to build up emergency cash reserves.
The Virtual Wallet has no monthly service fees for students and includes fee-free ATM withdrawals at PNC Bank ATMs. Teens and adults, alike, receive ATM rebates for the first two non-PNC bank ATM withdrawals and up to $5 in ATM fee reimbursements per statement period for ATM surcharges collected by other financial institutions.
Unlike some student bank accounts, which decline transactions that would put your account in the negative, the PNC Bank Virtual Wallet offers one automatic courtesy refund of Overdraft item fees per month. However, the Virtual Wallet’s Low Cash Mode makes it easy to avoid overdrafts with alerts that tell you when your spending balance drops below a certain point.
You can also use Payment Control to choose to pay or return certain ACH transactions if your account balance is negative.
4. Wells Fargo Clear Access
Wells Fargo Clear Access is designed for teens ages 13 and up, as well as previously underbanked or unbanked customers. It’s considered a “second chance” bank account, but the lack of overdraft charges and no monthly fees also makes it great for teens just learning financial responsibility.
Be aware that children under 18 cannot open an account online. They must open the bank account at one of the 4,800 Wells Fargo branch locations nationwide.
Clear Access has no monthly fee for account holders ages 13 to 24. Teens 16 and under will need a joint account holder who is over the age of 18.
Wells Fargo Clear Access was certified by the Bank on National Account Standards as meeting the requirements for safe and affordable bank accounts with no overdraft fees. A straightforward account with few bells and whistles, the account includes access to the user-friendly Wells Fargo mobile banking app and mobile check deposits. You also get Zelle person-to-person payments and a debit card compatible with digital wallets like Google Pay.
There are no overdraft fees with Clear Access, but transactions that would bring your account into the negative are likely to be declined. There is no minimum balance requirement, but you’ll need a $25 minimum opening deposit.
5. Chase First Banking Account
The Chase First Checking Account is available to kids ages 6 to 17 and has no monthly fees. To open an account for your teen or tween, you must have a qualifying Chase checking account, such as Chase Total Checking.
It’s easy to open an account online and make transfers from your account to the Chase First Banking account in the mobile app. You can set up automatic recurring transfers for allowance or approve requests from your child for money.
Set a spending limit for general spending or for specific purposes. You can even create a list of approved stores where your child can shop with their debit card. For existing Chase customers, Chase First is one of the smartest choices for a teen checking account due to the convenience and easy parental controls.
6. Capital One MONEY Teen Checking Account
The Capital One MONEY Teen checking account is one of the most popular checking accounts for kids. You don’t need a Capital One account to open a MONEY account with your kids, as the account can accept external transfers.
The account is available for kids ages 8 and up. Once the teen turns 18, they can convert it to a Capital One 360 Checking Account of their own with no monthly fee.
Unlike Chase, Capital One MONEY Teen pays interest on checking account balances. It’s only 0.10% annual percentage yield, but it is enough to begin teaching kids the value of compounding interest. Capital One’s teen product has no monthly service fee, no minimum balance requirement, and no minimum opening deposit.
Through the mobile app, kids and teens can set savings goals, designate funds in “savings buckets” or for spending with their Capital One Mastercard debit card, and make withdrawals at any Capital One or AllPoint ATMs with no fees.
Parents can make automatic transfers for allowance, set up one-time transfers, and even pay kids rewards if they meet specific savings goals. You can track spending and view transactions in the mobile app or set up text alerts.
7. Bank of America Advantage SafeBalance
Unlike the other three largest national banks in the U.S., Bank of America does not have a dedicated teen checking account. However, Bank of America customers can open a joint account with their child who is age 13 or older and give them access to their own debit card.
Bank of America recommends the Advantage SafeBalance bank account for teens and college students under 25. There is no monthly fee on the account if one of the account holders is under 18, or under the age of 25 and a student, or if any of the account holders are members of Bank of America Preferred Rewards.
A straightforward, checkless account, BofA calls SafeBalance “a smart start for students.” Kids ages 16 and up can be sole owners of the account, but you might choose to be a joint account holder for convenience.
The SafeBalance account doesn’t have a lot of bells and whistles, but it is a great way to get your child set for the future with an account at a nationwide, reputable bank with 4,000 branch locations nationwide.
8. Axos Bank First Checking
Axos Bank First Checking offers a checking account where you can earn interest. It pays a 0.10% annual percentage yield on all balances. It is available for teens ages 13 to 17, with an adult account holder.
Axos First Checking boasts no monthly maintenance fee, no overdraft fee, and reimburses up to $12 per month in out-of-network ATM surcharges.
Be aware that your child can only make $500 in debit card purchases per day and can only withdraw up to $100 per day at ATMs.
Axos Bank is consistently rated one of the best for online banking by top personal finance websites. The First Checking account is a straightforward way to teach teens financial independence and the ease of online banking.
9. Connexus Credit Union Teen Checking Account
Connexus is a top-rated credit union that’s easy to join with a one-time donation to become a member of the Connexus Association. The Connexus Credit Union Teen Checking account offers up to 2.0% annual percentage yield with zero monthly service fees, free ATM transactions within the Co-Op or MoneyPass networks, and overdraft protection with linked accounts.
Kids ages 10 to 17 can open a teen checking account to earn a high APY. When they turn 18, the credit union will transition their teen account into a Connexus Innovative Checking account with no monthly fees.
Young adults can choose to convert the account into an Xtraordinary checking account through the credit union to earn interest. The Xtraordinary account offers up to 1.75% APY when you make 15 debit card purchases or spend $400 with your debit card.
10. Alliant Credit Union Teen Checking
Alliant Credit Union has won awards from top personal finance sites as one of the best credit unions in the country. With no monthly service fees and no overdraft fee, it’s a straightforward account that will introduce teens to the personalized service of credit unions.
Teens can earn interest with a rate of 0.25% APY on their checking account balance. Keep in mind, to earn that high yield, they will need to opt in to receive eStatements and make at least one electronic deposit per month.
As with a regular Alliant credit union account, your teen will receive up to $20 in ATM fee reimbursements per month, and pay no fees at 80,000+ ATMs nationwide.
Alliant Credit Union Teen Checking is one of the few teen checking accounts that provides overdraft protection. If you sign up with a linked savings account, Alliant Credit Union Teen checking will automatically transfer funds from savings to cover debit card purchases.
You will need a $25 minimum deposit to open an account with your teen, ages 13 to 17.
Prepaid Debit Cards for Kids
If you feel your child or teen isn’t ready for a checking account, you might consider a prepaid debit card for kids, instead. Products like Greenlight, Cash App, Revolut<18 are not your typical banking account, but are prepaid debit cards that provide kids with easy access to money.
1. Greenlight
Greenlight is one of the original names in pre-paid debit cards for kids and teens. Greenlight offers three different plans with the following monthly service fees.
Greenlight Core: $4.99/month
Greenlight Max: $9.98/month
Greenlight Infinity/$14.98/month
Each plan includes debit cards for up to five children or teens, access to the app, and parental controls. After that, these plans vary somewhat in their offerings.
The Core plan pays 1% interest. Greenlight Max pays 1% cash back on your child’s debit card purchases, deposited automatically into their savings account to earn 2% interest.
Greenlight Infinity also pays 1% cash back on purchases. It pays 5% APY on savings. But Greenlight Infinity is much more than just a debit card or money account. It’s also a family safety and protection app that provides the ability to send and receive SOS alerts, crash detection that automatically alerts 911 in the event of a car crash, and family location sharing.
Greenlight has vast capabilities for money management, including the ability to set limits on spending, reward kids with deposits for chores or accomplishments such as high grades, and pay a monthly allowance.
Kids can create a customized card, as well, which often appeals to teens.
2. Cash Card
Cash App is the popular person to person payment app that comes with a debit card you can use for online or in-store purchases. Now, everyone age 13 and up can gain access to a customized Cash Card of their own.
Cash Card is an easy-to-use card that allows you to send and receive money from external accounts or from friends and family who also use Cash App. You can use Boosts in Cash app to find savings on everyday items from popular stores. Boosts are a great way to teach kids how to save money while shopping.
There is no minimum deposit to open a Cash App account.
3. Revolut
Revolut has no monthly service fee and links to an external account or your Revolut online bank account. You can set spending limits and receive alerts when your child uses their debit card.
You can also assign “tasks” to your kids and set up instant transfers from your account when the task is complete. You can also set up automatically allowance payments, or create a list of chores and put money directly on your teen’s debit card when that chore is done.
Features to Consider for Opening a Teen Checking Account
The features you’ll find in the best free checking accounts for adults should also apply to teen checking accounts. Most of the best teen checking accounts on our list meet the following requirements.
No Monthly Maintenance Fees
You don’t want to pay money so your teen can learn about managing money. Teach your teen early on that some of the best things in life – including their checking account – can be free.
Low Minimum Balance Requirements
Look for an account with no minimum opening deposit and no minimum balance requirements. Fortunately, even banks that have minimum balance requirements to waive fees for other checking accounts typically have no requirements for free checking for teens.
Low or No Fees
Make sure there are no ATM fees, no overdraft fees, and no hidden fees for any reason. Most teen checking accounts will decline a purchase rather than put the account into overdraft, which can help teens build financial responsibility and learn money management.
Linked Savings Accounts
When you’re evaluating a teen checking account, you may also want to look for a linked savings account with savings buckets, so your teen can set goals and plan for future purchases. Compare interest rates on teen accounts, discuss the other features and benefits, and enroll your teen in making the choice with you.
Parental Controls
You should be able to lock and unlock your teen’s checking account within the mobile app, set spending limits, and even designate certain funds to be used only for specific purposes.
Online Banking Through a Desktop Portal or Mobile App
Teens today are tech savvy. Fortunately, most teen bank accounts – even those from brick and mortar banks and credit unions – include an easy to use mobile app with separate logins for teens and their parents.
Direct Deposit
Features like direct deposit may not be as important, unless your teen is working and wants their paychecks deposited into their account. Most of the bank accounts on this list, however, do offer the service. Some even deposit funds up to two days earlier than usual.
It’s a nice bonus when teen checking accounts can be converted into a regular checking account once your child reaches adulthood.
Pros and Cons of Bank Accounts for Teens
As you evaluate the features of these teen checking accounts, you might wonder if it’s even worthwhile to open a checking account for your teen. Opening a bank account for your teen can help them develop good personal finance habits early on.
Let’s consider other benefits and drawbacks of checking accounts for teens.
Pros
Conveniently transfer money from your linked account, wherever you are
Teach children and teens about saving and investing
Teach the basics of using a mobile banking app
Build financial responsibility
Money is protected by the Federal Deposit Insurance Corporation up to $500,000 for joint accounts
Cons
Teens unfamiliar with budgeting may spend more with a debit card handy
Some financial institutions charge fees
Your teen may lose their debit card, creating a security risk
You may need to make a minimum deposit to open the account
When all is said and done, the benefits of teen checking accounts far outweigh any inconveniences. Just make sure to choose a banking account with no minimum deposit requirements or monthly service fee at a bank or credit union that offers responsive customer service.
Also, make sure you can keep tabs on your teen’s spending through alerts or a mobile app.
How to Choose a Teen Checking Account
Now that we’ve explored some of the best checking accounts for teens, you may have already made your choice. If not, here are some aspects to think about when choosing the best checking account or prepaid spending account for your tween, teen, or college student.
Choose the Type of Teen Account You Want (Checking Account vs. Savings Account)
First, think about whether you want a prepaid debit card, a checking account, a savings account, or both. Do you want to choose a money account from a bank or credit union? Would you prefer to open the account at a brick and mortar bank or are you and your teens comfortable banking online only?
The answers to these questions should give you a good place to start.
Consider the fee menu (monthly service fees, recurring transactions, ATM withdrawals, card reload, etc.)
It shouldn’t cost money to teach your teen money management. Consider any fees related to the account. Similarly, you might prefer a bank or credit union with no minimum deposit to open an account.
Some of the best teen checking accounts pay interest, which is a great incentive to help your teen start saving money and to put a little extra money in their pocket.
Consider the Age and Responsibility Level of your Teen
Most of the best teen checking accounts feature alerts for parents through text or an app, capabilities to freeze spending or set limits, and turn off the debit card in the app in case it’s lost or stolen. These are good capabilities as your teen learns how to manage money.
Because you can’t spend every minute tracking your teen’s finance, however, you also want an account that will either decline transactions that would put the account into the negative, offer overdraft protection, or waive overdraft fee.
How to Open a Teen Checking Account
When you’re ready to open a checking account for your teen, you’ll want to make sure you have their date-of-birth and Social Security number handy, as well as your own. Make note of any minimum deposit requirements, as well, and have a plan in place to fund the account.
Fund the Teen Checking Account and Activate the Debit Card
Most teen checking accounts will allow you to make a deposit from an external account or make a mobile check deposit in the app. If your teen works, you can have them request a form to have their paycheck deposited automatically via ACH transfer.
If you open a teen account with Chase, Bank of America, or other big banks, you can easily transfer funds from your linked internal account in minutes.
Once your teen receives their debit card, you will want to show them how to activate it by calling the number on the card or setting up their PIN at an ATM within the network. Let them know that their PIN should be easy for them to remember, but hard for anyone else to guess. They shouldn’t use their birthday or the last four digits of their phone number, for instance.
Frequently Asked Questions
Do teen checking accounts have monthly fees?
Most of the best checking accounts on our list do not have maintenance fees, service fees, or ATM fees.
Can a minor have a checking account?
Yes, a minor can open a checking account jointly with a parent or guardian.
What happens to a teen checking account when I turn 18?
Some of the best teen checking accounts automatically convert to regular checking accounts when the child turns 18.
Can I open a teenage bank account online?
You can open many of the checking accounts on this list online. However, to open a Wells Fargo Clear Access account for a person under the age of 18, you’ll need to visit a brick and mortar branch.
What is the minimum age to open a teen checking account?
Some teen checking accounts are available to children as young as six years or eight years old, as long as they are opened jointly with a parent or guardian. Teens 18 and older can open an account on their own. Many student checking accounts designed for young adults ages 18 to 25 have no fees for college students.
How much money should you keep in your teenager’s checking account?
How much money you keep in your teen’s checking account will depend on a variety of factors. How much can you afford to pay in allowance or fees for chores per month? Is your child earning any money of their own they can deposit? Do they typically receive cash gifts for birthdays or holidays?
Keep in mind, funds in teen checking accounts are FDIC insured up to the federal limit of $250,000 per account holder, per account type. In the case of jointly held accounts with a parent and a minor account holder, these accounts are insured for $500,000 in total, or up to $1 million if you have linked checking and savings.
You probably know Cash App as an instant payment app that you use whenever you need to send someone money. And that’s because it’s great for this, with some of the lowest fees out there and same-day transfers. You can even send money to people who don’t have a Cash App account, making this a perfect option for sending your technologically-challenged relatives the cash you owe them.
But for all the benefits of using Cash App for peer-to-peer transfers, this is only a fraction of what the app can do. For example, did you know you can also use Cash App to do your taxes? Save money? Invest?
Let’s talk about just a few of the best Cash App features you’ve probably never heard of – and how to get started using them.
What’s Ahead:
Early direct deposit 💰
How many times have you checked your bank account waiting for your paycheck only to be disappointed that it hasn’t landed yet? With Cash App, you can get paid just a little earlier, which can make a lot of difference when money is tight.
All Cash App users may be eligible to receive their paycheck up to two days earlier than scheduled.
All you need to do to qualify to get paid early is make sure your account is set up to receive direct deposits from your employer. Then, you don’t have to do anything at all – if your direct deposit can be processed early, it will be. Cash App is able to process some direct deposits more quickly because they take out the pending period after a transaction is approved.
Just know that to get your paycheck faster, your employer has to be on board too. You won’t get it any earlier if there are issues verifying a payment or your company is late paying you.
Debit card 💳
Have you heard of the Cash Card? Normally, we don’t get that excited about debit cards. But this one is different.
The Cash Card by Cash App is a Visa debit card that can be used anywhere Visa is accepted and digitally with Apply Pay and Google Pay. It’s linked to your Cash App account instead of a bank account or debit card and uses your Cash App balance. You can think of it like a prepaid debit card.
The Cash Card requires you to be at least 18 years old to apply on your own, but you can also apply with the help of a parent or guardian if you’re between 13 and 17 years old.
This is an especially good choice for teens because it:
Doesn’t charge fees for things like transfers and card customization
Prohibits spending at certain merchants like casinos and liquor stores
Sets transaction limits for everybody
Doesn’t require a separate bank account
If you’re under 18 years old and open this card, you’ll share your account with the adult you recruited to do this solid for you. They’ll be able to see all of your transaction history, block merchants, and even lock your card if needed. To add money to your account, you can ask your parent or guardian to transfer some money to you, deposit cash yourself, or receive direct deposits from an employer. Your balance is FDIC-insured up to $250,000, so you don’t have to worry about security.
You can also use the Cash Card to score discounts, called Cash Boost Discounts, at select merchants. With Cash Boost discounts, you’ll automatically save money on purchases made using your Cash Card if they fall within the offer you’ve added. Since you activate Boosts yourself, you can choose the best one for your spending habits. You can only have one Boost active at a time, but free money is free money. If you shop anywhere often, the savings can be significant.
Tax filing 🧾
If you need help getting your taxes filed correctly and want to be sure you’re getting as much money back as possible, Cash App Taxes can help. This free tax-filing program lets you file all your state and federal taxes online, and it’s available to every Cash App user.
To take advantage of this handy feature, you just need to log into the app and upload any tax forms you have like W2s. Then, you’ll estimate your refund and get your documents filed, with the help of experts if needed. You can even get your refund up to five days early if you opt to have it deposited into your Cash App account.
This service is best for people with pretty simple financial and living situations. For example, if you have just one stream of income and standard deductions, you’d be a perfect fit for using Cash App Taxes.
If your taxes are more complicated and confusing, you might find another type of tax software, with personalized support, to be more appropriate.
Cash App Pay 🛒
Cash App Pay is just another feature you might not have known Cash App had. This service lets you make payments to merchants using your Cash App balance, as long as they’re set up as a Square Seller. Cash App works in-person and online and all you have to do is scan a seller’s QR code to find them. It’s contactless and doesn’t cost you anything extra.
As an added perk, Cash App Pay builds in limited-time offers as an incentive to reach for your phone instead of your wallet when buying stuff. To see what kind of deals are out there, go to the Discover screen of the Cash App. This will show all participating merchants and the discounts they’re giving Cash App users, as well as rules and restrictions. Sometimes, you’ll even find giveaways and sweepstakes you can enter here.
Any available discounts are applied automatically when you check out using Cash App Pay (unfortunately, Cash Card purchases and Boosts don’t count).
Not all merchants accept Cash App as a form of payment, but when they do, definitely think about using this instead of your credit or debit card.
Bitcoin investing ₿
Yes, you can trade bitcoin with Cash App. You can also store it, send it to other people for free, use it for purchases, and more.
If you’ve wanted to dip your toe into crypto but didn’t know where to start, Cash App makes it pretty easy to get into bitcoin investing.
There are three different ways to buy bitcoin: one-time purchases, automatic purchases, and custom orders.
⚡One-time purchases: For one-time purchases, you’ll use the balance in your Cash App account, which can either come from payments people have sent you or from a linked credit or debit card. These orders are placed immediately and there’s no limit to how many you can make.
🔁 Automatic purchases: For automatic purchases, you’ll need to set up direct deposit for your account and enable the Bitcoin Auto Invest feature. This lets you invest a percentage of your paycheck in bitcoin, but there’s no commitment and you can change the percentage whenever.
📅 Custom orders: Custom orders essentially let you schedule orders to go through when prices are optimal for you. More experienced crypto investors are likely to appreciate this feature.
Cash App stores your bitcoin for you using cold storage. This means your coins are stored offline to keep them safer from cyber attacks, but you can still access and withdraw them any time you want.
Summary
Cash App is a lot more than just a payment app. If you take full advantage of all its features, it can be a useful finance app to have in your corner (or the corner of your screen). With features to help you save time, save money, and meet your other financial goals, you definitely want to download Cash App if you haven’t already.
And if you do have the app, start poking around to find new ways to use your account. Because chances are, you’re probably not using Cash App for everything you could be.