Many credit card issuers today came up with different versions of prepaid credit cards or prepaid debit cards for consumers. Some prepaid cards are even endorsed by popular celebrities. If you’re planning to get your own prepaid card, being confronted with so many choices can prove to be a tough challenge. So which one should you pick? Consider these tips:
Know your purpose. Why do you want to get a prepaid debit card? What kinds of purchases do you plan to use it for? Are you planning to use the card on your trip? Different prepaid credit cards offer varying features and services so it’s important to know your personal needs first before starting your search for a prepaid card.
Check the fees. Some prepaid debit cards are known to carry expensive fees and these are the ones you want to avoid. What kinds of fees can you expect? Some prepaid cards require a one-time set-up fee and activation fee but you can also find others that offer free set-up and activation service.
Most prepaid credit cards charge a monthly fee to maintain the account. This fee can range anywhere from $3 to $10 or higher, depending on the type of prepaid credit card. You will also incur a per transaction charge each time you use your prepaid card for payment. Other prepaid card fees you should be aware of are overdraft fees, withdrawal fees, reloading fees, customer service fee, card replacement fee, card renewal fee, etc.
Evaluate and compare. The only way you can be sure that you’ve made the right choice is by spending some time evaluating and comparing your options. Check out a reliable credit card comparison site to see a list of prepaid credit cards in the market.
Of course, you want to look for a prepaid credit card with a minimal set of fees and reasonable terms. For instance, you can save a great deal of money if you go with a prepaid card that offers $0 activation fee, free direct deposit, and $0 or minimal monthly maintenance fee. Aside from the costs, don’t forget to consider the features of the prepaid credit card.
Ensure credit reporting. In the past, prepaid credit cards cannot be used for building or rebuilding credit because there is no way to monitor the cardholder’s account activities. Since prepaid cardholders do not revolving credit, some prepaid card issuers came up with a special program to prove a person’s credit-worthiness. How so?
By using your prepaid credit card or prepaid debit card to pay off your monthly bills such as electricity, cable, internet, and other service subscriptions, the issuer will be able to keep track of your prepaid card use and report your account activities to the major credit bureaus. Indeed, a prepaid debit cardholder now has the chance to use the card as a tool for building credit or repairing bad credit. Take note that not all issuers of prepaid cards offer credit reporting service so you need to carefully read the fine print before making a choice.
About the Author:
Tara Tiemann is the credit specialist for Go-Prepaid. Which is a resource site for people who want to live debt free! If you are on a budget, using a prepaid credit card and secured credit card can save you big money!
