Prepaid Credit Cards: Freedom within a Limit

Taking into account that credit cards are plastic explosives and can doom anyone’s financial future if handled the wrong way, many among us deny abiding by a simple rule to suffer for sometime in the financial purgatory, if not forever. So, how can you balance upon the thin line that divides necessity and extravagance? The answer is this: use prepaid credit cards.

What is the key difference between a normal or an unsecured credit card and a prepaid credit card? With a normal credit card, a person uses the money provided by the bank or the issuer. With a prepaid credit card, the cardholder spends with his or her own money.

To further define it, a prepaid credit card requires a certain amount of money to be deposited in the account of the cardholder, and it acts as sort of a debit card. The only difference between a prepaid card and a debit card is that the prepaid credit card lets the cardholder retain the cash in the account if monthly payments are done on a regular basis. Otherwise, the payable amount is deducted from the security deposit.

It seems that a prepaid credit card is a convenient method to control credit card debt but at the same time still grant the flexibility of plastic money. That alone determines who should get a prepaid credit card; the only question that remains is how to get the card.

Want to get a prepaid card? Simply call the bank that issues the card you want or go online to find a prepaid credit card. You will find both prepaid Visa and Citibank cards along with prepaid gift credit cards, which are prepaid Visa cards accepted anywhere and similar to Visa debit cards. Below are the names of some of the prepaid credit cards you can get.

The All-Access Visa Prepaid Card comes with no upfront costs, allows for online application, and takes only five days for the card to reach the applicant, while Hilton HHonors Visa Card, (a Citibank prepaid card) offers 15,000 bonus points upon first usage. The card also provides three HHonors bonus points for every dollar spent.

Compass Gift Cards are available for any amount between $25 and $500 and can be used just like a Visa credit card, but are only available online.

Why Prepaid Cards Are Not As Great As You Think

But beware. You will be required to pay special fees and have to comply with all card limitations.

For example, Bank Freedom Prepaid MasterCard can charge you the following fees

  • A monthly service fee of $4.95
  • A loading cash fee of $4.95
  • A pin debit fee of $0.50 per transaction
  • An ATM balance inquiry of $0.50 each time
  • An ATM withdrawal decline of $0.50 each time
  • An ATM cash withdrawal of $1.50 plus any additional charges by the ATM owner
  • Bill pay of $4.95 per month which includes 10 payments; $0.50 for each bill payment over that amount
  • A bill pay paper check of $1.00 each
  • Each mailed paper statement is a cost of $5.95
  • A reissue card costs $9.95
  • The paper check to close account is $14.95

The following limitations would also apply:

  • A minimum monthly deposit of $500 can cancel the monthly service fee
  • The amount of each load must be at least $20 and no more than $500
  • The cash load frequency is restricted to twice a day, four times per week, or 10 times per month

Remember, you as the cardholder are liable for the card. According to one card’s terms and conditions,

If you do not contact us immediately, you could lose all the money in your account (plus the maximum overdraft line of credit, if applicable).

Here’s my advice to you. You do not need prepaid credit cards. And I am going to show you how to get the real thing that works much better, provides real benefits, and offers security. Keep reading.