Pre-paid Credit Cards

Pre-paid credit cards are cards that you pre-load with your own funds and then use just like regular credit cards – everywhere that you would use a credit card.

Pre-paid cards look just like any other credit card – so retailers (or friends) have no idea that you’re using a pre-paid card rather than a credit card.

Fees generally depend upon how you “load” the cards with funds and how you use the cards. Most cards don’t charge load fees if you have checks deposited directly from your employer, but do charge if you walk into a participating retail outlet and load the card with cash.

Since retailers pay the credit card issuers a percentage each time you use your card, your own monthly or per-use fees are often waived if you use the card a specific number of times per month.

Different cards have varying limits on how much money you can “load” or spend in a given 24 hour period. In most cases, it’s a higher dollar amount than the average consumer would deposit or use in a day.

At first glance, you’d wonder why anyone would use a pre-paid credit card. But they are a convenient financial tool for a number of consumers:

• Those with bad credit who cannot get a regular credit card – or who don’t want to pay the high rates associated with a poor-credit credit card.
• Those who believe in “living on cash” but want the convenience of shopping on line or filling the car with gasoline in the middle of the night.
• Parents who want a convenient, safe way to supply spending money to their children.
• Travelers who don’t want to carry cash or use credit.