Table of Contents Hide
- What is a Prepaid Credit Card?
- How Does a Prepaid Credit Card Work?
- Importance of a Prepaid Credit Card
- Best Prepaid Credit Cards in 2023
- Maximizing your Prepaid Credit Card
- Most Important Features of Prepaid Credit Cards
- Are Prepaid Credit Cards Worth it?
- Is There a Prepaid Card with no Fees?
- Can Prepaid Cards Hurt Your Credit Score?
- What are the Downsides of Using a Prepaid Card?
- Why Prepaid Cards are not Accepted?
- What is the Monthly Fee for a Prepaid Card?
- Can I Just Buy a Prepaid Card?
- How Much Do Prepaid Cards Cost Per Month?
- Why Prepaid Cards are of High Risk?
- Is there a Debit Card that Works like a Credit Card?
- Do any Prepaid Cards Build Credit?
- Related Articles
Prepaid credit cards are one of the most convenient solutions when it comes to credit cards. They’re also the most misunderstood cards available, therefore it’s time for some clarity to completely comprehend what these cards are all about, what intrinsic potential they have, and whether or not prepaid credit cards are suited for you. We’ll also show you some of the top prepaid credit cards available for different purposes including for international travel, rebuilding credit, or cards with no fees, and what makes them so great. Let’s get started!
What is a Prepaid Credit Card?
Prepaid credit cards are one of the market’s fastest-growing financial products. Prepaid credit cards allow you to load money onto them in a variety of ways, and the amount you load onto the card determines how much you can spend. So, if you load $100 into your prepaid credit card, you will only be allowed to spend $100.
Despite their popularity, there is a lot of misinformation regarding them. For example, despite the fact that it is indicated, there is no such thing as a prepaid credit card – it is just a prepaid card, and the two are diametrically opposed.
How Does a Prepaid Credit Card Work?
Prepaid cards are quite simple to use. Simply load the card with the amount of money you wish to have available for purchases; then, as you use the card, keep an eye on your balance to ensure it covers the transactions you want to make.
For example, if you load a prepaid card with $100 and spend $20, you’ll have $80 remaining to spend. If the balance falls to zero, or if you want to make a purchase that exceeds the card’s current balance, you must add additional money or cover the difference with another form of payment, much like with a gift card.
Importance of a Prepaid Credit Card
These prepaid credit cards are useful for a variety of reasons, including:
#1. Easy approval process even if you have poor credit
Prepaid credit cards, like secured credit cards, are ideal if you don’t have a stellar credit history. Prepaid cards, on the other hand, do not demand any onerous collateral, and the only limits on the account are the ones you set for yourself. If you are unable to obtain approval for a traditional bank account or credit card, you can still obtain prepaid. They are simple to obtain because the best-prepaid credit cards do not consider your credit score and do not demand a credit check.
#2. Help you stay within budget
Even if you have perfect credit and can get approved for a wonderful cash-back credit card, a prepaid credit card can help you stay on track. These cards provide the same convenience as a credit card (swipe and go) without the risk of overspending.
#3. Setting limits and teaching your kids how to spend responsibly
Furthermore, because you load money onto the card and can only use the amount you placed on the card, this is an excellent alternative for young adults or teenagers who haven’t learned how to be responsible with money yet. It’s an excellent teaching tool for teaching children how to spend wisely. If you want to compare perks, you may also look at some good credit cards for students.
#4. Not living in fee fear
There are numerous costs to be aware of while using standard checking prepaid credit cards if you do not want to be charged. You won’t have to worry about overdraft fees with prepaid credit cards because you can only spend what’s on the card.
When you use prepaid credit cards, there are no late penalties or interest charges to worry about, which relieves you of a significant burden. Interest payments can be a significant contributor to large and unneeded credit card debt, thus this is a significant motivation for many people.
#5. Traveling safely
Finally, prepaid credit cards are among the best credit cards for travel, especially international travel. Because they are not linked to your checking account, if your card is stolen, you will only be out of the money that was loaded onto the card and not your whole savings or checking account amount.
Prepaid credit cards can not help you rebuild or create fresh credit, therefore those who are new to credit card spending should be aware of this. If that’s your goal, you should look at a secured credit card or a credit card for those with bad credit instead. This is one of the best prepaid credit cards for you if you want to avoid interest, bank fees, and saving or check cashing costs, wish to keep spending under control, or can’t get approved for other cards.
Best Prepaid Credit Cards in 2023
Let’s look at the top prepaid credit cards available in 2023, including those that can help you rebuild your credit with no hidden fees:
#1. PayPal Prepaid Mastercard®
Because it allows you to transfer funds to and from your regular PayPal account, the PayPal Prepaid Mastercard® is the finest prepaid card for PayPal customers. The card shortens the time it takes to access direct deposits by up to two days.
Optional cash-back incentives from the card come as statement credits for certain net purchases. For further security, cardholders can receive numerous virtual account numbers.
#2. Brinks Prepaid Mastercard
The Brinks Prepaid Mastercard has a plan cost and offers set monthly payments or pay-as-you-go transactional pricing. You can reduce your monthly plan fee by receiving a specific amount in direct payments each month.
This Mastercard prepaid debit card provides cash-back benefits as well as a limited negative-balance purchasing cushion to handle minor overdrafts. Cardholders have the option of opening a high-interest savings account.
#3. NetSpend® Visa® Prepaid
The NetSpend® Visa® Prepaid Card includes a monthly flat price or you can pay for each individual purchasing transaction. You can lower your monthly charge by making a specified number of direct transfers throughout the month.
This Visa debit card is available to approved customers and includes Netspend Payback Rewards, mobile check loading, and in-person cash reloading at over 130,000 Netspend outlets.
#4. Netspend® All-Access ® Account
Prepaid cards are convenient, but you often forego collecting interest on your transactions. With the Netspend® All-Access ® Account, you may earn 6% APY on your daily purchases. You can also obtain the same direct deposit benefits as if you had a debit card linked to a non-prepaid account.
Simply set up direct deposit and you’ll have immediate access to your earnings, potentially getting paid two days sooner than if you deposited it manually. If you need to deposit a check, you can do so quickly and conveniently with your smartphone.
#5. Self-Credit Builder Account
The Self-Credit Builder Account, as one of the finest prepaid credit cards for credit rebuilding with no hidden fees, differs from the other options offered. Making on-time, substantial payments with this choice will do wonders for your financial health in the long run. A first-time credit user who wishes to build credit with a one-of-a-kind, user-friendly account.
Maximizing your Prepaid Credit Card
If you decide a prepaid credit card is the best option for you, make the most of it by:
#1. Shopping around for the best-prepaid credit cards on the market
Compare the various benefits available on any prepaid credit cards you possess to the fees incurred to determine if it’s profitable for you. We’ve done most of the legwork for you and created a chart of the best cards, which you can find below.
#2. Setting up direct deposit
Because many cards will waive the monthly cost if you load a certain amount of money onto your prepaid credit card each month, setting up a direct deposit that automatically goes into your card is a fantastic idea. This manner, you’ll always have that money in the account to easily meet the monthly load limit. This can include your paycheck, social security payments, and so forth.
#3. Using free online services
Some prepaid credit cards charge you for calling in your balance, while others do not. You can avoid these fees entirely by using free online resources that allow you to manage your account from a computer or mobile device.
#4. Avoiding ATM withdrawals
ATM withdrawals are often charged on prepaid credit cards. You’ll also have to pay whatever service fee the ATM provider charges. As a result, each transaction is more expensive than alternative solutions. Purchases are the best way to spend money with your prepaid credit card in general.
Most Important Features of Prepaid Credit Cards
So, what constitutes a good prepaid credit card? While air miles, cash back rewards, and APR offers are common considerations when considering credit cards, the following are the most significant things to look for in a prepaid credit card:
#1. Easy to load card
You want a prepaid card with various locations across the country and other simple ways to load money onto your card (such as mobile payments, bank transfers, and online tools). If it’s difficult to load money onto the card, it’s not worth the plastic.
#2. Acceptance network
It is just as crucial to know where and how you can use the prepaid card as it is to load money onto it. PayPal, for example, has a large network of online shops who accept its prepaid card.
This is a critical calculation for you to perform. Examine all of the fees levied by the prepaid card, such as monthly fees, direct deposit charges, bill paying fees, ATM withdrawal fees, and others, to determine how much you will be charged at the end of each month. If the sum appears to be large, it may not be a favorable card for you. We looked for prepaid credit cards with low costs.
#4. No credit check/Ease of approval
The main point of these prepaid cards is that they are simple to obtain authorized for. If a prepaid credit card denies your application or requests a credit check, you should cancel it immediately. We only recommended cards that were simple to obtain approval for.
Are Prepaid Credit Cards Worth it?
Prepaid cards can help you avoid debt because you can only spend the amount you’ve previously placed. They’re also an excellent budgeting tool.
Is There a Prepaid Card with no Fees?
Most prepaid cards have monthly maintenance fees of roughly $10, which is comparable to checking account fees of up to $15 each month. However, you may be charged a cost to open your prepaid card, which is usually approximately $5. Many prepaid cards will additionally charge you an ATM fee, a reload fee, and a foreign transaction cost.
Can Prepaid Cards Hurt Your Credit Score?
Prepaid card activity, unlike standard credit card activity, is not recorded to the three credit reporting agencies and will not help you establish or maintain your credit score.
What are the Downsides of Using a Prepaid Card?
Prepaid cards have only a few drawbacks, but they are considerable. Prepaid cards have costs. Cardholders may be subject to a variety of costs, such as activation fees, transaction fees, ATM withdrawal fees, reloading fees, monthly fees, or inactivity fees. Check the card’s fine print for fee types.
Why Prepaid Cards are not Accepted?
A purchase could be denied for a variety of reasons, including:You don’t have enough money on your credit card. Your card has not been activated or registered. The address you provided when making an online or phone purchase differs from the address on file with your prepaid card provider.
What is the Monthly Fee for a Prepaid Card?
While many firms allow you to acquire a free card online, you may also buy one at a local merchant for between $1 and $6. In addition to the cost of purchasing the card, most cards carry a monthly fee that ranges between $4 and $10 per month.
Can I Just Buy a Prepaid Card?
Prepaid cards can be purchased at retail outlets (such as grocery stores and drug stores), online, by phone, or from some banks and credit unions. If you purchase the card online, you may receive a virtual card or a physical card in the mail.
How Much Do Prepaid Cards Cost Per Month?
Most prepaid cards have monthly maintenance fees of roughly $10, which is comparable to checking account fees of up to $15 each month.
Why Prepaid Cards are of High Risk?
Because of their secrecy and ease of use, criminals frequently utilize prepaid cards to assist with money laundering. Prepaid cards can be used to launder money since they allow persons to transfer huge sums of money discreetly and easily withdraw cash.
Is there a Debit Card that Works like a Credit Card?
Cashback debit cards are debit cards that provide benefits similar to credit cards, such as cashback, points, or miles. They are tied to your bank account and work in the same way as cash does, in that you cannot spend more money than you have in your account.
Do any Prepaid Cards Build Credit?
Prepaid cards do not contribute to credit building because they do not report to credit bureaus and are more similar to gift cards or debit cards than credit cards.
You understand the distinctions between prepaid debit cards and secured credit cards now that you’ve read about prepaid credit cards for bad credit. Both cater to subprime customers, albeit in different ways. We’ve given you a starting point for selecting the best card for your needs.
Remember that nothing precludes you from holding both sorts of cards and benefiting from their respective powers. You should look for prepaid credit cards with the lowest costs and finest bonuses.
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