Everything You Need to Know About Prepaid Credit Cards

By Dannie Phan

Prepaid credit cards can be useful and convenient. They’re an excellent alternative to carrying cash and you don’t need a bank account to use them. They can be expensive though, so it’s important to look into all the details and find the product that is best suited to your needs.

What Is A Prepaid Credit Card?

A prepaid card is a card that is preloaded with money. These cards typically look like other credit and debit cards but function slightly differently. A normal debit or credit card is typically linked to a bank account. With a debit card, you spend money that is already in your account, while with a credit card you have the option of borrowing money and paying it back at a later date.

A prepaid card is far more like a gift card and is not linked to a bank account. Cards can be purchased preloaded and can usually be topped up again as the need arises. Some are general, while others are linked to specific stores or rewards programs.

What Can You Use Prepaid Credit Cards For?

Prepaid cards can be used for all the usual things you would use a debit card for, including shopping, paying bills, and atm withdrawals. People put them to use in a number of ways and for various reasons. They’re simpler and safer than cash, but don’t offer the temptation that credit cards do.

A Great Gift

A prepaid card is a great gift if you’re not sure what to get someone. They’re safe and easy to use. Some are store-specific, but most are accepted almost anywhere that you can use a debit card. They’re far more flexible than a traditional gift card and can be used online and to draw money from an ATM.

For Older Children

A reloadable prepaid card is a great alternative to a credit or debit card for older children. Not having to link the card to a bank account keeps things simple and can help keep spending under control. Famzoo Prepaid Mastercard is a great option for families. The fees are low and it allows you to use multiple cards.

Budgeting

If you’re struggling to keep your spending under control, then a prepaid card can be a good option. They help you keep track of how much you’re spending and avoid the temptation of taking on debt. The best part is there are no late fees or interest charges. Just be sure to carefully research all the fees and costs associated with your prepaid card to make sure it doesn’t end up costing you more than it saves.

Online Purchases

If you don’t have a debit or credit card that is linked to a bank account, then using a prepaid card is a great way to shop online.

Can You Use A Prepaid Card To Build Credit?

Unfortunately, prepaid cards cannot be used to build credit. If your credit score is low and is stopping you from using a credit card, then you can consider using either a secured or an unsecured credit card. There are actually products available specifically for people with a bad credit history. 

A secured credit card works in much the same way as a prepaid card and requires you to load money into your account before you spend it on the card. Unsecured credit cards are also available and function in all the same ways as a regular credit card, they just have quite a low spending limit. The Credit One Bank Platinum Visa for Rebuilding Credit and Indigo Mastercard for Less than Perfect Credit are both good options to look into.

Best Prepaid Cards

The best prepaid card is the one that best suits your needs. There’s a large variety to choose from and it’s worth carefully reading the all terms and conditions if you plan to use the card regularly. Here are some questions to help you choose the card that suits you best.

How Do Prepaid Credit Card Fees Work?

Almost all prepaid cards have fees associated with them. The fees vary, so it’s worth choosing the card that will have the lowest fees for your specific situation. With many cards, you can reduce the fees by depositing a certain monthly amount or by using a specific network of ATMs to avoid the ATM fee. Look out for initiation fees, monthly fees, and transaction fees.

Prepaid cards can be convenient, but aren’t always cheaper than using a low-fee bank account. Make sure to do your calculations carefully before deciding which option is best for you. The MOVO Virtual Prepaid Visa Card has no monthly fee. If you’re looking for an actual card that you can hold in your hand and store in your wallet, then the Paypal Prepaid Mastercard keeps things simple with low monthly costs.

What Can Prepaid Credit Cards Be Used For?

Consider which ways you’re most likely to use your card. If ATM withdrawals are a high priority, then you’ll want to find a card that doesn’t have high ATM fees. If you’re looking for store-specific cards then check out the Walmart Moneycard and the Kroger Rewards Prepaid Visa Card. Both cards offer some excellent deals and rewards when you shop. What you sacrifice on flexibility, you’ll save on costs and make up for in rewards.

What’s The Minimum Balance?

Some cards require a minimum balance on the card. Try to choose one with a minimum balance that matches the amount you plan to spend. Fifth Third Access 360° Reloadable Prepaid Card has a minimum deposit of almost zero. Some cards will reduce fees if you pay a higher deposit, so it’s important doing your calculations carefully.

How Easy Is It To Top Up a Prepaid Credit Card?

If you plan to regularly top up the card, then it’s worth taking into consideration how easy it is to top up and which method you prefer. Would you like to use a mobile app? Or do you prefer using a store or ATM to do cash reloads? If you just need the card once off, then you don’t really need to consider how easy it is to top up.

Can You Get A Free Prepaid Debit Card?

Almost all prepaid debit cards have costs and fees associated with them. If you’re willing to put in a little time and effort, it’s actually possible to get free, preloaded debit cards.

Try A Rewards Program

A great way to get free prepaid debit cards is by using a rewards program like Swagbucks. Get cashback by earning points for simple tasks like shopping, uploading receipts, taking surveys, and watching videos. 

There are a variety of ways to redeem your points, including a range of gift cards and sweepstakes, but one common way is to get cashback in the form of a prepaid debit card, like a visa prepaid card. You can usually choose between a traditional visa prepaid card and a virtual visa prepaid card.

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