Prepaid Credit Cards

When searching around for the best prepaid credit card, the main thing to consider are the fees associated with the card. The costs associated with prepaid cards are arguably the main disadvantage.

1) Application Fees

Some providers will charge you for opening an account, some offer free accounts and some accounts can be set up for free provided you preload the card with a certain amount of money.

2) Is there a monthly fee to use the card?

Again, some cards are free, while others make a small charge, perhaps $10-20. If you find a card that charges a monthly fee, find out what you get for that fee. Do they provide online statements, a helpdesk, additional insurance etc?

3) Will you be charged a fee when you load money into your account?

Does it vary according to the method that you use, for example, cash, credit card or bank transfer? And if you deposit money through a bank, supermarket or post office, will they charge you a deposit fee?

4) Will you be charged when you purchase goods and services on your card?

If so, do the costs vary according to the method of purchase (online, offline etc)? What about the charges for purchases overseas or in different currencies?

5) Will you be charged when you withdraw cash from your account through an ATM?

Will this be higher for foreign transactions?

6) Other Unexpected Charges

Will you have to pay for calls made to the provider’s helpline? Will you have to pay for a courier to deliver your card? Will you have to pay for your card to be renewed when it reaches its expiry date? If you lose your card or it is stolen, will you be charged for a replacement card? Will you be charged a fee to close your account?

Find out all the potential costs that will apply to the way that you intend to use the prepaid card. How much would they cost you over the course of an average year?

Choose the card with fees that will suit your use. For example, if you don’t intend to spend much through your prepaid card, but want it for the flexibility that it offers, go for a card with no setup of monthly fees even although it might have higher transaction charges. On the other hand, if you intend to route most of your monthly spending through your prepaid card, a card with monthly fees and no/lower transaction charges might be best for your circumstances.

The main thing is to compare the prospective costs of each card against other prepaid cards and also traditional credit cards. The costs of all prepaid cards should continue to drop as the demand for them grows and the market becomes more competitive. Better deals for prepaid consumers will appear all the time.

But bear in mind that the lowest costs won’t always be the best option. If you’re in debt and need to cut up your credit cards to prevent you from sinking any deeper, slightly higher fees on the safety and flexibility of a prepaid card may be preferable to keeping your existing credit cards and being tempted further into debt.

It’s also worth taking other practical considerations into account, besides the overall costs, including;

How can you add money to your account? How many options do they provide, bank, online etc? Can you do it 24 hours a day?

Can you manage your account online?

Is there an additional card? Is it free?

What level of purchase and fraud protection does the provider offer?

As with all things financial, shopping around is vital to get the best deal on your new prepaid card.

Prepaid phone cards are very popular among college students, frequent travelers or simply by anyone who wants to save on their long distance and international calls. Rechargeable prepaid phone cards are especially economic because the minutes that are added after purchasing the card are often less expensive. For instance, an AT & T prepaid phone cards can be purchased at most Wal-Mart stores at a cost of approximately $.08 per minute. When recharged, the minutes average $.05 each.

There are a number of reasons why prepaid phone cards are so popular, including the need to sometimes dial into a long distance telephone number for internet connections. Rather than paying the higher charges with the phone company, the user can have their modem dial using the calling card and then connecting to the internet.

While on vacation, hotels charge significant rates for long distance calls, but prepaid phone cards allow the user to dial into a toll-free number before dialing out to a long distance line. This will save big bucks as it will eliminate any long distance charges on the hotel bill.

Some cellular phones, such as Tracfone, operate on a prepaid basis. For each local call, one minute of talk time is equal to one unit (or minute) of prepaid service. International calls, on the other hand, may be significantly more expensive. In an effort to minimize the cost, some cell phone owners opt for programming prepaid calling cards into their phone and dialing out using the toll-free number. International rates will be higher with prepaid phone cards, but will likely be less than that of a cellular or regular phone service. This process will work on either cellular phones or a regular landline connection.

Along that same line, prepaid phone cards are also helpful in sending faxes. The same rules apply with long distance fax numbers, which can be costly through local telephone companies. The use of prepaid phone cards can often reduce these costs.

Toll-free numbers are free at payphones, so if you find yourself having car trouble or needing to get in touch with someone and the only phone nearby is a payphone, don’t worry about having the right amount of coins or having to call collect. If you have a prepaid phone card with you, the call will be routed through the toll-free number at no additional cost to either you or the person whom you are calling.

In addition to the aforementioned advantages, prepaid phone cards are simple to use, easy to recharge from the store of original purchase, online through the prepaid phone cards customer service or via the toll-free number listed on the back of the card.

Prepaid debit cards are one of the more safe methods of building credit for a consumer, as well as one of the more safe methods of issuing credit for a bank. The basic commonality all prepaid cards have is that a deposit of some kind must be made by the person before the bank will grant them credit.

Card varieties differ in the amount of credit given based on the deposit, but the typical limit is 100% of the deposit. Over time, some issuing companies will permit the consumer leniency and increase the amount of credit given in proportion to the deposit.

Why, you may ask, is this necessary? Prepaid debit cards sound like a way to give your money to someone else before you spend it. From outside the perspective of the world of credit, yes, it does seem redundant. But take a look at this hypothetical situation, from the perspective of a consumer, and hopefully some light will be shed on the usefulness of prepaid debit cards.

Carl was living it up. He had a six-figure salary, a wife to make all other husbands jealous, a new Land Rover, and an upscale apartment. The thought of credit issues was laughable at this pristine moment in his life.

But something happened. Carl’s luck began to turn. His beautiful wife, an amateur tennis fiend, was taking far too many lessons with her 25 year old Italian instructor, specifically at his private retreat where her cell phone curiously could not get reception. Carl’s company hadn’t made the mark for the quarter, and people at corporate were hunting heads. Carl’s head, recently bald because of stress from the Mrs., must have stuck out, because he was the first one fired.

Then the divorce started, and while Carl was quite sure that he wasn’t to blame for his wife’s infidelity with someone half his age, she none the less made off with the car and apartment, and some serious alimony payments to come from Carl. Carl’s credit score plummeted as he defaulted on his bills. He was left a broken, unemployed, bald man who could never watch tennis again.

When things leveled off years later, Carl wanted to rebuild his credit, though no credit card companies would accept him. He needed to find a way to transfer his cash into the world of credit, just so he could show that he’d make good on some payments.

As you can guess, Carl’s answer is a prepaid debit card. He can show the bank that he’s legitimate, in a way that only giving them cash can. The bank put credit on his card; Carl purchased Rogaine and a low-powered anti-depressant; and bingo, his credit began to return.

So, if you find yourself in such a situation, needing credit but inspiring no confidence from issuing companies, prepaid debit may be the way to go. Additionally, on a more serious note, pre-paid debit cards are increasingly used by those with relatively good credit as a method of controlling their spending. If there is not enough balance available for a charge, the charge will be denied. And there is no mandatory payment due at the end of the billing cycle.