Companies offering anonymous reloadable debit cards claim that their product provides you with access to cash without the need to reveal your personal information. However, since every bank and ATM transaction is traceable, there is no such thing as a completely anonymous debit card.
Cards for Purchases
Anonymous cards carrying a Visa, MasterCard or other major credit lending institution logo allow users to purchase items at retailers or online and possibly withdraw cash from an ATM. These cards are commonly sold at grocery or drugstores. However, these cards are not reloadable, making them akin to gift cards rather than debit cards.
The majority of anonymous reloadable debit cards -sometimes called “stored value” cards- work the same as traditional ATM debit cards. They allow cash withdrawals from machines accepting them. You must enter a pin number to access your money. These cards do not allow you to purchase items at retailers or online, and are therefore not like anonymous credit or gift cards.
Like other debit cards, anonymous cards are issued by banks. However, the issuing bank collects very little personal information and does not run a credit check. Typically, the bank ascribes a number to your account and sends you a debit card imprinted with only that number. Unlike debit cards provided free by banks to their customers, however, you must purchase these cards. The cost of a primary card ranges from $35.00 to $1,000, and $45.00 to $1,000 for each additional card.
You can reload your card by wire, PayPal or bank transfer or by sending a cashier’s check to the issuing bank. The bank may set a maximum card balance, which can be as high as $500,000, and a maximum daily withdrawal limit, usually $1,000. There is typically very little or no protection against fraudulent use. Some cards never expire while others expire in two or three years.
The Privacy of Anonymous Debit Cards
A bank’s claim that their card provides complete anonymity is typically misleading. When you purchase a card most issuers require you to provide your name and sometimes a photo ID. Additionally, your card is sent to you through the mail. This means that the issuing bank knows your name and address, and creates a link between your mailing address and the provider.
Reloading your card by wire transfer requires that you have a local bank account. This means that when you transfer funds you establish a connection between your local account and debit card. Since your bank likely gathered your personal information -including your Social Security number- when establishing your account, it’s possible to connect you to the deposit on your debit card. Moreover, because many places that provide cashier’s checks require your name, address and a photo ID before they will print your check, cashier’s checks provide very little additional privacy.
Lastly, every ATM transaction creates a record. Even if the card does not contain your name, the ATM associates your account number with your withdrawal. This means that the banks affiliated with the ATM have a record of the type of card you used and your account number.
The information revealed in each of these transactions differs, but, if connected, could result in your name, address and bank account becoming known. However, these cards make your personal information more difficult to find. Therefore, although the privacy of these cards is not as high as claimed, they offer more protection than traditional debit cards.
Potential Benefits
The use of a PIN number and the limitation of access to only deposited funds make these cards safer than carrying cash. They also allow you to budget how much you or someone else spends.
Anonymous debit cards also provide you with more protection when traveling abroad. When used overseas, withdrawn funds are provided in the local currency. This eliminates the need to exchange money or obtain traveler’s checks, and also allows you to avoid paying the high cash withdrawal interest rates charged by credit cards.
Potential Drawbacks
The biggest problem with anonymous debit cards is the amount and types of fees charged by issuing banks. Most banks charge fees for depositing and withdrawing money, balance inquiries and for replacing your card. Some banks charge you even for not using your card. Fees range from $1.00 to $15.00. When combined, they can drastically reduce the money in your account.
Using an Anonymous Debit Card
Thoroughly read the contract prior to purchasing or using an anonymous card. The fees charged by issuing banks for access to your funds may outweigh the small amount of additional privacy they provide.
