Prepaid cards can be purchased anywhere from malls to the local gas station.
Typically, the cardholder will buy a card; take to the counter to be loaded with
the amount the person wants to have on the account. Usually the credit cards
will require a minimum of $20, which includes the card fees.
After the card is set up at the store, the company will send a hard card
with the account name and number, which will be needed in order to make in
Benefits of a Prepaid Card
The main benefit of a prepaid card is no bill at the end of the month. If
there is no money on the card, then the charge will not be approved.
For people with no credit or bad credit, the prepaid card allows a user to
have a credit card without a credit check.
Many of the targeted audience are poor minorities who do not believe in
banks, so most of the cards allow direct deposit, so the user will not have to
pay check-cashing fees.
Another benefit is the ability of the cardholder to rent vehicles, make
purchases online, and make cash withdrawals.
Drawbacks to Prepaid Cards
The main drawback to prepaid cards is that they do not help people establish
or rebuild credit. Though some card providers will offer this service, most of
the time a fee is involved for them to put your history with the major credit
A huge issue with prepaid cards is that some come with the term “Debit” on
it. Most rental places require at least a secured card, so if this is the
motivation for the card, then you might want to look into other possibilities,
such as the secured card.
The fees associated with some of the prepaid companies can be staggering.
For example, Rush Card charges a $1 per transaction, until it reaches $10.00.
If the fees are over $10 then the excess charges are returned to the account
the following month.
Loading fees can be enormous if the company only uses Western
Union or some other pay program. A minimum load fee will be $4.95.
Just getting started with some prepaid companies can be costly. The average
price seems to be $19.95.
The final fee is usually for customer service by phone. The above companies
prefer that everything be done by Internet.