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ice dance
06-25-2011, 08:10 AM
Please, oh wise FSUers, tell me all about prepaid credit cards. Fees, are they widely used, etc. Thanks in advance.

Civic
06-25-2011, 09:07 AM
I've never used them but I can see how they would come in useful in teaching teenagers and college students how to live within their means. Unlike regular credit cards, a prepaid card wouldn't let them rack up debt.

Prancer
06-25-2011, 09:30 AM
I get prepaid Visas for my kids when they travel without me. I get them from AAA; they cost (I think) $5 a year for members. Most of the time, those cards work as debit cards, but they also work as credit cards. The cards are always in my name; I can track purchases and add money via internet.

We've never had any problems with them.

Barring AAA, I would recommend looking for a prepaid credit card at your bank first. The rates are usually better, often free for customers, and the system is usually very secure. I've used AAA only because if the kids lose their cards, they can always get another one at the nearest AAA office, whereas our credit union is local. If I were getting them prepaid cards to use regularly, I'd definitely go with the credit union.

Pros and cons are discussed here (http://finance.yahoo.com/banking-budgeting/article/110812/the-pros-and-cons-of-prepaid-debit-cards); I think prepaid cards are in pretty common use.

made_in_canada
06-25-2011, 10:17 AM
It might vary by country a bit but I got a prepaid visa for the olympics last year from my bank and it worked just like a regular visa and there were no exorbitant fees. I don't remember the charge so it must not have been ridiculous ;)

Skate Talker
06-25-2011, 07:21 PM
I checked these out Christmas before last and was appalled to see that (at that time anyway) there was a date by which the money had to be used or it was just lost. This was already after our legislation had disallowed expiry dates on store gift cards.

Japanfan
06-26-2011, 07:21 AM
I checked these out Christmas before last and was appalled to see that (at that time anyway) there was a date by which the money had to be used or it was just lost.

In my experience this is not the norm. Prepaid credit cards work just like any other credit card except for the fact that the maximum amount is already prepaid. So far as I know their isn't any annual fee, just as there isn't for a 'regular' credit card as opposed to one with many benefits.

The example Prancer was one of convenience while traveling. They are also useful for people who are trying to establish a credit rating and for people coming out of bankruptcy who want to build their credit up again.

mysticchic
06-26-2011, 07:50 AM
I would do a google search on a card. I used my bank when I got my kids cards. I think it cost 2.50 per 50.00. I've seen some that charge anywhere from 1-5 bucks everytime you use them or 3.00 to recharge the cards.

Norlite
06-26-2011, 02:23 PM
I believe Skate Talker is thinking of a Visa or MC gift card, not a pre paid CC.

Aceon6
06-26-2011, 04:33 PM
Yes, there is a huge difference between gift cards and pre-paid credit cards. As usual, the best deals are from banks or credit unions where you already have a relationship. Look for ones that let you see the account activity online as well as send you a "reload" alert if the balance falls below a minimum that you can specify. Our bank allows you to transfer money to the pre-paid card online and in real time. Very useful in case of emergency or if you want to minimize the risk for a lost or stolen card.

One warning, these aren't ideal if you plan to rent a car or stay in certain hotels. They sometimes put a "hold" charge through on the card that can greatly exceed you expected rental/hotel cost. When I travel, I always book the car and hotel on my AmEx and use the pre-paid for other expenses.

Vash01
06-26-2011, 05:32 PM
Another question for the wise ones:

If I get email offers for prepaid credit cards, should I trust them? I was getting from one credit card a while back.

It sounds like my own bank/credit union may give me a better rate, that is if I wanted to get one.

BigB08822
06-26-2011, 06:08 PM
One warning, these aren't ideal if you plan to rent a car or stay in certain hotels. They sometimes put a "hold" charge through on the card that can greatly exceed you expected rental/hotel cost. When I travel, I always book the car and hotel on my AmEx and use the pre-paid for other expenses.

This is a very important thing for people to remember. This applies to debit cards as well. I worked at a hotel and people would come up to the desk fuming because they had no money on their debit card. It was because they booked the hotel on a debit card which put quite a hold on there in case there was damage, smoking in the room, etc. It clears off a day or so after checkout but it can really cause problems if your bank account isn't well stocked.

PDilemma
06-26-2011, 06:14 PM
This is a very important thing for people to remember. This applies to debit cards as well. I worked at a hotel and people would come up to the desk fuming because they had no money on their debit card. It was because they booked the hotel on a debit card which put quite a hold on there in case there was damage, smoking in the room, etc. It clears off a day or so after checkout but it can really cause problems if your bank account isn't well stocked.

Using a debit card for gas does this as well.

BigB08822
06-26-2011, 06:20 PM
I use my debit card for gas and it never puts a hold on my card. I did one time not realize my account was low and the pump actually cut off where my account would be at $0 So somehow they have the technology to know exactly what you have in your account. It was a huge problem because when you zero out your account with Capital One they assume you are closing your account. That wasn't fun. This may also differ from station to station or perhaps state laws differ.

Anita18
06-26-2011, 08:34 PM
I use my debit card for gas and it never puts a hold on my card. I did one time not realize my account was low and the pump actually cut off where my account would be at $0 So somehow they have the technology to know exactly what you have in your account. It was a huge problem because when you zero out your account with Capital One they assume you are closing your account. That wasn't fun. This may also differ from station to station or perhaps state laws differ.
They can also do this depending how expensive the gas price is. :P I noticed when gas was $4.50/gallon here that Chevron put a $50 pending charge on my card and freaked out and called my bank, and they said when gas prices are high, the gas station will put a hold on your card for $50 to make sure you have the money. It drops off after a day or two, but it would definitely be annoying for people with low limits!

I haven't noticed that hold since.

numbers123
06-26-2011, 08:39 PM
When gas price is high, most stations around my area, limit any purchase to $50.00 or $75.00 regardless of a debit or credit card payment. I assume if you paid in cash they would not limit.