Use Your Bank Account to Pay Your Prepaid Wireless Account

Replenishing your prepaid wireless account with your bank account is another option that has been around since almost the beginning of time.  The interesting thing about using your checking account directly is that unlike debit cards, money is not validated in real time.  What does this mean?  Well, essentially, you could enter in your checking account information online with your wireless carrier, and request to add $25.  Although they have verified that your account exists, and that you are the rightful owner of the account, the wireless carrier doesn't actually know that you have $25 in your account available.  The bank is simply providing a basic response that provides a level of confidence that the money is available, but does not guarantee that the funds will be there!

This Can Present Problems. For example:

• The bank can respond to the wireless carrier many days later (5-10 days in fact) that there is insufficient funds, which means that they are now out of pocket $25 (in the example above).

• Thinking that the $25 has already been taken out of your account, and not closely managing your account balance, you may do another withdrawal (ex. cash or debit card purchase), and that transaction takes your account below $25.  So, when the bank looks for the $25 you owe your wireless carrier, it's not there.  This usually results in additional fees that the bank charges, typically called an NSF (Non-Sufficient Funds) charge (usually in the range of $25 per NSF).  These fees can vary, but believe you me, you don't want to pay them!

• In the meantime, the carrier has added the money to your wireless prepaid account balance, or used the funds to apply it to your payment due.  So essentially, the carrier has provided you with service for which they will ultimately not get paid for!

To Combat This Problem, Prepaid Carriers Will Often:

• Charge a per transaction fee (ex. $1 to $3) to cover the processing charges from the bank, as well as any charges for non-sufficient funds.  Unlike in the postpaid world where such fees can be easily passed to you by charging it to your next bill, with prepaid, there's no guarantee that money will ever show up in your prepaid account for them to take.  Most (but not all) prepaid carriers do not have the ability to take your account into a negative status, which ultimately means that they have a very hard time getting the money you owe them.

• Force you to wait a number of days until the transaction with the bank clears.  But in the prepaid world, this is a horrible customer experience, and rarely used.  Why would you want to pay for something today that you can't use for a number of days?  Especially if you need the money on your account to make a call NOW!  You're putting money on your phone today because you need it today, not three days from now, right?!

Quite honestly, I never really understood why someone would want to use their checking account and pay such fees when they can use a debit card.  I expect that in the past not everyone with a checking account had a debit card, however, this has changed dramatically.  In addition, personally, I would avoid giving ANY company direct access to my bank account for security reasons.  The 2013 Target security breach is a good example of customers who had their bank accounts linked to their Target Red Card having funds depleted from their checking accounts.  Yes, those funds were ultimately returned to customers, however, it was a massive hassle, and if you're living paycheck to paycheck  it could cause real financial hardship.

Overall, it's fair to say that replenishing your prepaid wireless account with your bank account could be a good option for some people.  Just keep your eye out for how fast the money will be added to your wireless account, extra transaction/processing fees, and be sure to keep on top of your bank account balance to avoid NSF fees.  Depending on your bank, you may also be able to process a payment from your bank account to your wireless account manually as you need it, or setup recurring monthly payments.  This could be convenient to make sure that you never run out of money on your phone.  Just remember to check out all of the fees that may apply.

Be Heard!  Let prepaid wireless providers know what you want; fill out the survey now.