Prepaid Credit Cards

What is a prepaid credit card? And doesn’t the idea sound a little ridiculous? The main reason behind a credit card is that you don’t have the money at the time to pay for an item so you put it on credit and pay for it later.

With a prepaid credit card you have the cash on hand but you can only spend it where Visa and Master Card are accepted. This is nice if you don’t like carrying a lot of cash around with you.

They are also good if you want to give one as a gift. The sentiment seems a little more genuine than just giving a loved one a stack of bills and saying ‘give’r!’.

But you should understand that a prepaid credit card is subject to so many different fees that they really don’t make a lot of sense…although neither does our countries obsession with credit, so maybe it does make sense.

Here are some aspects of prepaid credit cards that may surprise you.

  • There is often a $4-5 fee for a card in the range of $25 to $300. So right off the bat you have thrown away a little bit of cash.
  • Most prepaid credit cards expire within a year or two. Some even expire in six months. If you don’t use all of your money on the card within that time, some banks will charge you a $15 closing fee. SERIOUSLY?!
  • You can often take cash out on your prepaid credit cards, but you will be deducted the usual $.150 service fee. Then, you may pay an additional service fee for using the ATM of another bank.
  • If your prepaid credit card is stolen, you can put a hold on it and get most of your money back. But, they will charge you around $5 to do that.

So why buy a prepaid credit card? Have no idea? I guess if you’d like to give the bank more of your money for no reason, it would be the fastest way to do that. So if you have a fetish for efficiency hop to it and get yourself a prepaid credit card.

The only reason you should get one of these cards is if you have terrible credit and you need a credit card to get a blockbuster card, or rent a car or something.