What are Prepaid Credit Cards?
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Many people are rejected after filling out a credit card application because of poor credit. The problem with this is that a major credit card is needed to make reservations for hotels, motels, car rentals and airline flights. Credit cards are also necessary when placing orders online or over the phone. Does this mean a person with bad credit can't do any of these things? Not if that person has a prepaid credit card.
A prepaid credit card account is opened by depositing money into that account, much in the same way you would make a deposit to open a checking or savings account. Once you have money in your account, you're issued a prepaid credit card that can be used anywhere one would use a regular credit card. The best part of the prepaid credit card is that you can charge to your heart's content and you won't be in debt. The money is yours and once it's gone, you can't spend any more until you make another deposit. There are no bills and no interest charges. It's the same principle as using a debit card linked to a savings or checking account.
So what's the catch? First, you'll have to pay a fee to set up your account. The amount varies, but you can probably expect to pay about US$5 to $10 to open a prepaid credit card account. In addition, you'll have to pay additional fees every time you deposit more cash into your prepaid credit card account. For those with bad credit, the benefits of a prepaid credit card far outweigh the risks. They're able to reserve rental cars or hotel rooms, and don't have to worry about credit card bills and interest payments later.
Those who are planning to use the prepaid credit card to pay for a monthly Internet subscription, or to purchase an item where a fixed amount is deducted from their card each month, might be dismayed to learn that this might not be possible. Many of these businesses don't want to do business with a prepaid credit card because there's always the risk that there won't be any money in the account when it comes time to pay the bill.
If you're frustrated because a credit card is necessary to get by in today's world, but can't apply for one because of bad credit, you might consider a prepaid credit card. You'll have most of the advantages of a credit card, and you won't have to worry about interest charges. Sounds like a prepaid credit card is a pretty good deal.
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New: Discuss this ArticlePosted by: anon197
Does a prepaid credit card report activity to the credit bureau? I am trying to improve my credit and am told that having an open account with timely pymts is the way to go. However, I am having trouble applying for a card. Is prepaid an option for this?
Posted by: anon358
I actually have the same question - even though I have been living in the U.S. since 9 years I still have not been able to establish ANY credit.
I have a checking and savings account since day one and always pay my bills on time in full but whenever I have tried to apply for a credit card I was denied. How long will it take about to establish credit through a prepaid credit card?
Posted by: anon975
Eufora™ Preferred Credit Builder Prepaid Credit Card....thats the only one I have found so far that does report to a credit bureau. Hope this helps.
Posted by: anon1133
You have to be very careful about credit card companies that "say" that they help re-establish credit. Most of them don't and it requires a federal action to become certified to do this. You also need to watch out for the free prepaid cards. Most of the time, they catch you on the loading, ATM and monthly fees. I purchased my Medallion Mastercard at [url] and have found it to be very good card. Good luck!
Posted by: anon1310
I would like to use a prepaid credit card as a means of security. I am hoping that it can not be traced to other accounts as my regular cards can be. Would I still have the safety of purchase that is provided by my regular card. In other words if my card is stolen and used is my amount of responsibility still only up to $50.00?
Posted by: anon1990
Hey i was wondering is there a age limit to this card like could a kid get one of these or no? if so what is the age limit?
Posted by: anon2341
Sorry, there is usually an age minimum of 16 to get a prepaid card, just like a regular one. Although I have seen some that offer to teens as young as 13.
Just a tidbit: a prepaid credit card is the same thing as a "charge card" of yesteryear. Posted by: anon2457
If prepaid credit Cards is similar to that of a Debit Cards, then why should we go in depositing a decent amount in bank and obtain a Prepaid credit Card.
We have to pay an initial amount to do this also. For that we could use a Debit Card instead. I hope in today's world, Debit card is also being widely used, wherever credit card is applicable.
Obviously Prepaid credit cards should not bear intrest,since the amnt used is ours, which is deposited in the bank. Based on that suerity we are able to obtain the cards.
Dont you think, this is just a trik played by the Bankers to populate credit cards in the market. Posted by: anon2730
Can I create a prepaid account under a false name? Is this the type of card illegal immigrants use? This might have some advantages if you don't like companies tracking you personal info.
Posted by: anon3007
Is there anything to distinguish this credit card from say, a regular visa or mastercard so that merchants/retailers would know that there is only a limited amount on the card, i.e. in the case of a car rental where they want to be assured you for any damage or non-return of the car.
Posted by: anon3043
What is a monthly maintenance fee?
Posted by: anon3719
Using a prepaid card is the best way to go in terms of shopping online (especially if its not a big name website.) The worst way to shop online is with your debit card especially if your pay check is being deposited to the checking account associated with that specific debit card. Remember you don't have the fraud protection as with a credit card. Timely credit card payments will bolster your credit ratings, while debit transactions do nothing for your credit ratings..(its your money from your checking account.)
Posted by: anon3923
can i use my bread prepaid card to pay next a £3.75p
charge over the phone so i can place my first order with them, as they say the only cards they don't accept is electron or solo, but they did not say anything about not accepting prepaid cards.... any answers please? Posted by: anon5271
I have been looking for a "Prepaid Credit Card", but all I have been able to find are "Prepaid Debit Cards" or "Secured Credit Cards" or "Prepaid Credit Cards" that are actually a membership you join and can only be used at their certain "club" store. Is there actually a "Prepaid Credit Card", that you put a certain amount on and you can't withdraw over that amount, period?
Posted by: anon5283
If there is no monthly fee, is there still a fee when you make a deposit?
Posted by: anon5462
There is no such thing as a prepaid credit card really. It is a secured credit card if you put money on it first (and then technically there is no credit). Prepaid debit cards can be used like credit cards if they have the MC or Visa logo, but you cannot 'borrow' money you don't have. There are a few prepaid debit cards with these logos and each has different fees and features. The best one I have found is from a company called gteks. They have a card that is better priced than walmart on all its fees and they have a very important feature to me and my family called card to card transfer. It lets me transfer money to anyone with a card and to banks for only $5 or less. I can even use my cell to do the transfers. They also do not require as much of my personal info which was good. Hope that helps!
Posted by: anon6195
Most of the credit reporting features for prepaid cards is a scam. You pay a fee (usually less than $20) and that payment is what is reported. Thought technically, they are reporting to credit bureaus, a $20 monthly payment will do nothing to improve your credit rating so you get nothing for your trouble. Netspend is probably the most well known and reputable company selling these cards. They have some cool mobile phone features like texting to receive your balance.
Posted by: anon8219
I checked out all prepaid credit cards and they all charge a lot of fees except one. There is no activation fee and no monthly if I use direct deposit. They claim it costs less than a regular checking account - which I can't get anyway. I've used it and they are pretty good.
Posted by: anon8337
To answer the question about rebuilding your credit with a prepaid credit card, no they do not report this.
However, if you are look to rebuild and need a credit card to do it then you can try a secure credit card (which if you ask me is the same as a prepaid card, because when you open the account your card is already in the negative) and they do report your activity. The major difference with this method is it will work just like a regular credit card, but you are required to make a payment before you use it or your available balance when you first get your card might be $50. You might be charged a higher apr, and they have a set min balance i.e. $20 month. When renting a car or something you will just have to have the amount available on your card as with a regular card. Merchants will not be able to tell it is secure.
Another way to build your credit is by going to your local credit union or bank and ask for a secure loan, or you can go to a local finance company and borrow a small amount I would start at $1,000. As with both options, (I recommend not spending the money, but putting the money to the side and using it to pay the loan back off) and make your payments on time and this is a quick way to improve your credit. Posted by: ChaseW
You dont have to get a prepaid credit card if you have bad credit. There are a lot of cards that will approve you.
Posted by: reallilbrat
dear anon5271, I have a prepaid credit card and i got mine at radio shack. You buy the card and put money on it. what you buy is the atm card. you go to the web site and register and they will send you the credit card
Posted by: rogerlax
This message is for those who wants to establish good credit. First of all, the prepaid credit card issuers do not report to credit bureaus. You would have to start establishing your credit by first obtaining a secured visa or mastercard, you deposit a certain amount of money (ex. $100) to so called CD account and you receive a credit card with $100 limit. Those banks report to all 3 credit bureaus, some report as a secured credit card account & some not. After a year the bank returns the deposited money and the account becomes unsecured, with the limit that you had. It is always a good idea to increase the limit before year ends, so you will end up with high limit card. There is a good website that offers both secured cards and bad credit credit cards as well as guaranteed approval cards regoardless of your credit, employment or income. You can visit that site and apply for a secured card even few cards each $100 or $150 to increase your credit score faster and higher. Each credit account is considered as a trading reference, more you have established - more credit you get from other creditors. Remember always make your payments on time and make little more than the minimum. Good luck.
Posted by: anon10924
I'd like to know if you have to give any identifying or verifiable information to have a prepaid credit card. If it worked similarly to a prepaid phone card, that would be a big help.
Posted by: anon11916
Has anyone heard anything about the RushCard, and if so what is your opinion about it?
Posted by: anon12199
does anyone know where to get a prepaid card from a physical store (NOT online)? the only ones i have seen are the one time use gift card ones where you can't reload them. im having trouble with identity theft and am looking to get a reloadable prepaid card to minimize loss
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