You May Struggle To Find Free Prepaid Credit Cards
Free prepaid credit cardsare hard to find. There are many ways to pay for purchases in life. Cash is a classic. Barter works sometimes. But plastic is the money of the modern age. One type of plastic is the prepaid card, often called a “prepaid credit card”, though really it doesn’t run on credit.
MasterCard says that “prepaid programs are powerful solutions for facilitating access to and spending money with greater security and efficiency than cash or cheques (checks).” Indeed, prepaid cards can play a role in careful financial management, as long as you understand their benefits and limitations.
Here are some facts you need to know about prepaid credit cards:
- CNN consumer advocate Clark Howard strongly advises against pre-paid credit cards. He warns that they lack many of the protections of traditional credit cards and have many potential catches.
- Store cards can only be used at the store, or chain of stores, named on them. This limits them greatly. Many of these store cards also have expiration dates or dates after which they begin charging fees, that is deducting money from your balance each month. However, store cards are usually free prepaid credit cards.
- Prepaid universal cards (MasterCard, etc.) can be used anywhere that the credit card logo on the prepaid card is accepted. So, if a store accepts a Visa they will accept your prepaid Visa card.
- They can be tough to use. Some stores with older systems may have trouble accepting payments via prepaid card if the balance on the card is less than the amount of your purchase. So it can make transactions go better if you know the exact balance of your card and tell it to the teller at checkout.
- Prepaid credit cards are not truly “credit” cards. That is, you are not extended any credit but rather are limited to spending the amount that is preloaded onto the card. In addition, these cards do not help you build credit.
- Prepaid credit cards generally cannot be used to reserve rental cards or hotel rooms. Though, you may be able to use them to pay a substantial deposit on a room if you are not using a credit card.
- Free prepaid credit cards are rare. Prepaid credit cards can make great gifts. However, universal cards, such as Visa and MasterCard, usually have a purchase fee of $4 to $5. Occasionally you may see a special offer to get a low cost or no cost card, perhaps near the holidays, but these are pretty rare, unless you opt for a store card.
- Some prepaid cards are reloadable. That is, after you have exhausted your balance (or even if you still have a balance remaining) you may add additional funds to the card. Some prepaid cards, however, are not reloadable. Often, there are still no free prepaid credit cards– there is even a fee for reloading. That is, once the balance is all used up the card has no value and cannot be reloaded. Though, some such cards become collector’s items due to their decorative appearance. Really.
- While some prepaid cards do not carry with them the same protections that actual credit cards do, some do. MasterCard, for example, says on their website that their prepaid cards do carry many of the same security features as MasterCard credit cards, including Zero Liability which protects you from unauthorized use of the card.
- You do not need to apply for a prepaid credit card. All you have to do is buy it. You can buy them online or at thousands of retailers around the country, including most drug stores.
Of course, one way prepaid cards are good is that they let you have instant credit cards; so if you need a card to, say make a purchase online, these might be your answer. For those who need a credit card for bad credit with no fee, or at least a minimal fee compared to an actual credit card, these can really help.
Resources
Clark Howard. http://www.clarkhoward.com/news/clark-howard/personal-finance-credit/suze-ormans-pre-paid-card-goes-kaput/ngRjF/
MasterCard. http://www.mastercard.com/ca/wce/PDF/Prepaid_Cards_Fact_Sheet_Eng.pdf
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