Your Guide to Using Prepaid Credit Cards

admin — Tue, 26 Jan 2010 05:36:24 +0000

For people who have a bad credit history and cannot qualify for a credit card, a preloaded card is the answer. Prepaid cards look exactly like any regular credit card except that it is easier to get a prepaid one. In this article, let’s discuss the advantages and disadvantages of using a prepaid credit card.

Prepaid Credit Card Advantages

Easy Access. Because no credit check is done, anyone can get a reloadable prepaid card at any time.

Budget Friendly. Do you have a problem with overspending? With pre paid credit cards, spending can be put in control more strictly since you can only use it if you have an available balance in your account. Once your available funds have been used up, the card must be reloaded with cash before it can be used again.

Avoid Bad Debt. A prepaid card does not provide a credit line so the risk of incurring bad debt can be avoided. There is no need to worry about paying the interest rate or late penalty fees which can cause debt build-up.

Convenience. Reloadable prepaid cards are great for people who are always on the go. If you’re a frequent traveler, you can simply take your card with you instead of bringing a huge amount of cash. Parents who have college kids who stay at boarding schools can send allowance though prepaid cards.

Prepaid Credit Card Disadvantages

Although there is no interest rate or late penalty fees, there are other costs associated with reloadable cards that you should watch out for. Find a prepaid card with reasonable fees by checking out comparison websites online. What are the costs that you should know about?

Upfront Fee. Although no credit check is required, most Issuers require the submission of an upfront payment. Sometimes the fee is known as “application fee” or “activation fee”.

Maintenance Charge. Prepaid cards usually carry an annual fee. However, aside from the annual fee, you may also be charged with a monthly maintenance cost or “service charge” to keep your account active.

Reloading Charges. Some Banks may impose an additional fee each time you make a deposit in your prepaid card account. In this case, it is a good idea to find a prepaid debit card Issuer that will not charge a reloading service.

Purchase Fees. Generally, there is a purchase fee for each transaction you make. It does not matter whether you made the purchase from a regular store or online. You can still be charged a minimal fee for every purchase.

Card replacement and renewal fee. In case you lose your prepaid card, there is a fee when you request for replacement. Also, the issuance of a prepaid card is often good only for a certain time period. When your card expires, you must pay a fee for the card renewal.

Yes, there are advantages with using pre paid credit cards. However, before getting one, consumers must make sure that there will be no hidden costs or unreasonable charges associated with their chosen card.

About the Author

Tara Tiemann is a credit analyst for Go-prepaid.com which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Prepaid Debit Card Fees that You Should Know

admin — Thu, 21 Jan 2010 05:19:59 +0000

Getting a prepaid debit card is easy, there is no question to that. However, despite the convenience of getting a debit card, consumers must still spend time comparing and shopping around before making a choice. Why? Although you don’t have to worry about interest rate fees and late penalty fees, there are other costs that you need to be aware of.

Basic Fees Associated with Prepaid Cards

Activation Fee. Activation fees can range from $9 to as much as $100, depending on the issuer and the type of prepaid card.

Negative Balance Fees. Normally, debit cardholders are not allowed to overdraw. However, there are cases when your bill can exceed your available balance, and you will be charged with a negative balance fee.

Decline Fees. Since overdraw is not allowed, your transaction will be declined if you try to use your debit card for payment without sufficient balance in your account. However, you can get penalized with decline charges.

Daily Limit Fees. Some issuers impose a daily limit or a maximum amount of charge per day. Thus, once you reached that limit, your transaction can still be declined even if you have existing funds in your account.

Cash Advance Charges. You can withdraw cash from your debit account using an ATM. However, you can also incur cash advance charges.

Reloading Fees. If you reload your debit card by making a direct deposit, no extra fees shall be charged. However, if you try to reload using other services, you may incur an additional reloading charge.

Additional Charges. Some gas stations, restaurants, hotels and car rental service who accept debit card payment may impose a “hold” or extra charge on your bills.

ATM Balance inquiry. There can be a minimal fee of $1 or less each time you check your balance from the ATM.

Maintenance Fees. Some prepaid card issuers charge a monthly maintenance cost, aside from the yearly activation fee.

Inactivity Charge. You may also get penalized if you fail to use your debit card on any transaction for more than 60 days.

Customer service Fee. Before calling your debit card’s Helpline, make sure that you understand the possible fees you can incur. Not all issuer provide a free helpline.

Transaction Charges. Most prepaid debit card issuers will charge you an additional cost for each transaction you make- be it offline or online.

Account termination fee. If you want to close out the account, you can be charged with a termination cost as well.

Card replacement. In case of lost, you must pay a fee if you request for a replacement.