Prepaid Cards have been around for a long time now, and a lot of people use prepaid cards despite their costs and charges. Prepaid cards have their pros and cons and are targeted at people who find it difficult to open a bank account and need a card to shop online or just avoid carrying cash.
When you buy a prepaid card — you have to load it with your money and then you can use it like you would use a debit card. Most prepaid cards will charge you a fee when you are loading it initially and then other fee like — annual fee, reloading fee etc. Each card differs in their fee and charges so you can compare a few prepaid credit cards and see which one is best for you.
Here is a take on the top pros and cons of prepaid cards.
Benefits of Prepaid Cards
1. Safety: Prepaid cards are a good option for people who are not able to open a bank account and don’t want to carry cash with them all the time.
2. Shop Online: It is impossible to shop online without having a debit or credit card. If you need to shop online and don’t have a debit card, then you can use a prepaid card to do this.
3. Use for Car Rentals, Air tickets and Gas Stations: A lot of people use prepaid cards for getting car rentals, at gas stations or booking airline tickets. There are some places which don’t accept cash and prepaid cards come in handy at such places. However, there are some disadvantages to this, which we will discuss later.
Disadvantages of Prepaid Cards
1. High Fee: If you are using a prepaid card — you will be charged every step of the way. There will be a fee when you load it, then another when you re-load it; it is quite likely that you will be charged if you ever call them up and then there is the annual fee. The high fees of prepaid cards make them the last option for anyone.
2. Does Not Help Build Credit: A lot of people get a prepaid card because they are not able to get credit cards and want to build their credit histories. Prepaid cards don’t help in this at all. They are not means of credit and don’t report to the credit bureaus, so they don’t help you build a credit history in any way.
3. Not all Rentals and Hotels Accept Prepaid Cards: This is a really important point because a lot of people get a prepaid card to rent a car and then find out that it is not accepted at their rental. If you plan to get a prepaid card for renting a car or booking a hotel, then first check with them if they accept any prepaid cards or not. Often, you will find that it’s not easy to rent a car with prepaid cards.
4. Hold Money For Over a Week: The other thing that takes people by surprise is that some gas stations or hotels will put a hold on your prepaid card that lasts over a week. So, if you fill gas worth $20 worth with your prepaid card, some gas stations may even put a hold of $75 on your prepaid card, and you won’t be able to use this money till the hold lasts.
These were some important pros and cons of prepaid cards that you should keep in mind while deciding whether one is right for you or not.
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My relatives every time say that I am wasting my time here at
net, except I know I am getting familiarity all the time by reading such pleasant articles or reviews.
another con left out of the equation is that these pre-paid debit cards have a 10,000 max. if you’re salery one day succeeds that then you are stuck. not everyone using these cards are poor and ignorant idiots. most of the pros benefit the company profit bacause saving totally comes from the individual’s mindset.
As a freelance writer for a prepaid debit card called, Mango Money, I can tell you that not all prepaid cards charge the same way.
For example, with Mango Money, if you load $500 a month on the card, there are no reloading fees. If you refer-a-friend to get their own card you can actually make $4 bucks. Here are the details:
https://www.mangomoney.com/jsp/mango/Referral_Card.pdf
Of course there are fees so be a smart shopper and compare all the fees before you choose the company that will service you.
Great outline of the pros/cons of prepaid cards. For me, I feel the pros outweigh the cons. With a prepaid card you have added security (should only have a minimal balance), you can buy things online, use PayPal, get gas, even rent cars. I can do everything I need to with mine and never have to worry about over spending like I did with credit cards. Prepaid cards are also great for money management.
I think its not just about the pro’s and con’s but also how you can get around the cons and there are some great tips here how you can save on prepaid card fees – Top Tips for prepaid card savings
Cheers
Yoram
Great tip Birdie, thanks!
One thing about using the prepaid cards at hotels/motels. When you check to see if they accept them, also ask if there is a maximum per day that you can charge onto them. We tried using debit cards for a hotel once, and discovered you were limited to a maximum amount daily. For a long-term stay, we had to remember to pay the bill every couple of days or be in BIG trouble. Not sure if it works like that for prepaid cards, but definitely worth making sure it does not 🙂
In fact, I have seen a lot of people saying that very thing in forums, that they were in debt, and then they got a prepaid card because at least it protects them from getting into debt again.
One advantage of prepaid cards that I feel is left out is the fact that you can’t spend more than you have which will be a great benefit to many people as most people struggle to control their finances.