Can Debit Cards Be Used to Offset Mortgage Accounts?

Prepaid debits cards are becoming increasingly popular. They are a good way to control spending if you have had some credit issues in the past, However, you should weigh the pros and cons before using it for large payments such as a mortgage.

If you want to make a payment to mortgage accounts, most people would use a cheque or have it drawn automatically from their everyday account. There are some risks with everyday accounts, however. If you overdraw your account, you may be charged overdraft fees. Even with the fees that accompany everyday accounts, you should also know that there are even more fees that are associated with prepaid debit cards.

Account Fees

Everyday accounts have fees. You pay fees for fees for extra transactions or special transactions, such as branch deposits or withdrawals. These can become a nuisance.

However, with prepaid debit cards, you will have to pay fees for any ATM withdrawals, currency conversions and even replacing a lost or stolen card. You are also most likely required to maintain a minimum balance, as well. In addition, there are fees for putting money on your card. You have to pay money to use your money! You will also have to pay to talk to customer service more than once a month. Even if you have had your card lost or stolen, if you have already contacted customer service once already that month, you will incur an extra fee.

The average amount for fees for prepaid debit cards is around $30 to $60 if you use the card for “normal” transactions. If you have an everyday account that charges more than this then a prepaid debit card might be a viable answer but if not, it may not be a wise choice to use this option in lieu of an everyday account.

Other Risks

In addition to the fees, there are other limitations to using a prepaid debit card for big payments such as to mortgage accounts. There are spending caps in these cards. It may not be equipped to process a large sum such as a mortgage payment. To make payments to mortgage accounts, it may be wiser to stick to traditional cheques or to have the funds drawn directly from an everyday or savings account.

Prepaid debit cards are a bridge to help control spending and get on top of one’s finances. You will want to use it as a tool in this manner and follow all of the requirements as listed otherwise you will pay extra in fees.