Discover the ease and convenience of prepaid cards. If you have no credit history and are looking for a way to tap into the convenience of cashless shopping, a prepaid card might be the right choice for you. These cards don't require a credit check or a hefty deposit. Keep reading to learn whether prepaid cards are the solution you've been looking for. When comparing prepaid cards it is important to pay close attention to the fees.
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Prepaid cards are cards without a line of credit. In other words, you make a deposit into an account and then use your card to shop anywhere - online or offline - where credit cards are accepted. However, you can only spend the amount of money you deposited.
Many people use prepaid cards as an alternative to expensive checking accounts. While you generally have to pay an activation fee and some may also have monthly maintenance fees, there is no risk of overdraft charges or bounced checks.
Prepaid cards are ideal for those with no credit history or very poor credit history. They also appeal to those who want the convenience of shopping online but want to avoid credit card debt. In particular, parents find that prepaid cards are an excellent, risk-free way to help their teenagers learn how to manage money. Instead of handing over a card with a high credit limit, they give their teen a prepaid card.
Generally, no. Since prepaid cards are not offering a line of credit, there are no monthly required minimum payments to be reported to the credit bureaus. For those trying to rebuild credit after a bankruptcy or financial crisis, a secured credit card might be a better option.
Be aware that some prepaid cards will offer to report your purchasing history to credit bureaus for a monthly fee. Before agreeing to this service, keep in mind that most creditors rely only on credit reports from TransUnion, Experian and Equifax and not other credit bureaus.
Before you apply for a prepaid card, consider the following five questions:
At CardRatings.com, we've compiled information on some of the top prepaid cards. Before making your selection, read our expert card reviews to help you decide if you are getting the right prepaid card for you.