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  1. #1
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    Prepaid credit cards

    Please, oh wise FSUers, tell me all about prepaid credit cards. Fees, are they widely used, etc. Thanks in advance.

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    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.

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    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; I think prepaid cards are in pretty common use.
    Trolling dates all the way back to 397 B.C. - People began following Plato around and would make fart noises after everything he said.

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    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
    "Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better." -- Samuel Beckett

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    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.

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    Quote Originally Posted by Skate Talker View Post
    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.

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    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.
    softball

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    I believe Skate Talker is thinking of a Visa or MC gift card, not a pre paid CC.

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    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.
    AceOn6, the golf loving skating fan

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    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.

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    Quote Originally Posted by Aceon6 View Post
    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.
    -Brian
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    Quote Originally Posted by BigB08822 View Post
    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.

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    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.
    -Brian
    "Michelle would never be caught with sausage grease staining her Vera Wang." - rfisher

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    Quote Originally Posted by BigB08822 View Post
    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. 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.

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    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.

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    Quote Originally Posted by numbers123 View Post
    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.
    I can imagine that being the case too, but I don't think I found out that day. I have a car with a small gas tank and $50 even at $4.50/gallon might have filled it up if I had gone when the light just turned on.

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    I used to work for a gas company HQ. The debit cards are authorized with a "pre-authorized" amount before the pump will start. The standard used to be $50 as far back as the 1980's, so it might be more today.

    Once you stop the pump and get a receipt, the point-of-sale terminal marks the "actual" amount as the dollar amount you received. HOWEVER, the pre-authorization amount isn't freed up until the store closes the electronic payment batch for the day - it's called "settling the batch." Only then does the bank release those unused funds. If the store doesn't settle their batch on a timely basis, that $50 sticks around longer.

    It was a major issue when gas prices were low because that amount was substantial: few people came close to using the $50 amount. Travelers were the most inconvenienced: if they were driving from NY to Florida, they would have to stop for gas several times. Each time, their debit card was pre-authorized for $50, tying up their credit/debit limit rather quickly, even if they only pumped $25 at a time. As one irate customer pointed out to me at a station in Florida, he couldn't check into his hotel because the hotel couldn't pre-authorize their amount - he was over his limit.

    It's less of an issue today since gas is so expensive. My car takes almost $50 worth of gas on every fillup. So, most people don't notice the pre-authorization hold any more. Plus, gas stations tend to settle their credit/debit batches on a standard schedule today. If they don't settle the batches, they don't get paid and Accounting starts asking questions. BTW, if you use the "credit" option on your debit card, the pre-authorization doesn't apply.

    Tip of the day: when you use a cashier to authorize a pump, watch what they do with your credit card, especially if the credit card swipe isn't built into the register. (Some have a separate machine.) At one station, we had one of our clerks arrested. The dirtbag was double-swiping cards for the same amount - once for the customer's sale and once for "general merchandise." He then took that amount of cash out of the register and pocketed it for himself while ringing up the customer's sale as "credit." The store manager thought that there was something wrong with the credit card machine because there were regular double charges, which the store had to refund to the customers weeks after the fact. It took an audit team weeks to figure out what the creep was doing. Make sure they only swipe your card for one transaction.
    Last edited by FigureSpins; 06-26-2011 at 08:58 PM.

  18. #18
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    Quote Originally Posted by numbers123 View Post
    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.
    Umm...where? Because we filled up our old truck in Omaha with well over $50 on a credit card more than once before we traded it.

    My dad was CEO of a company that owned stations in a tri-state area (NE, IA, SD) before retiring. None of them ever did this. They did, however, place holds just as FigureSpins describes it. People who complained were urged to get a company credit card.

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    I remember amount limits, but it was only when there were gasoline shortages. Some stations do institute rationing so that customers don't hoard fuel. Prices go up when supply is short.

    Some chains apply an amount limit during the night shift. Partially, it's for security: by limiting how much a cashier can receive from cash customers during each fill up, they make the station a less attractive place to rob. Usually, though, it's used when the station's tanks are running low on fuel and they have to wait for a delivery.

    Managers don't want the tanks to go empty and have to turn customers away - it gives the station a bad rep and ticks off Corporate. Better to say "Limit x gallons/$" and keep the station open than to put up the "NO GAS" sign. Especially at a convenience-store-gas location: while people may come in to buy a soda or snacks, they're more likely to keep driving to the place further down the road. The staff still has to be paid, so it's an expensive lesson to learn.

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    Quote Originally Posted by FigureSpins View Post
    Some chains apply an amount limit during the night shift. Partially, it's for security: by limiting how much a cashier can receive from cash customers during each fill up, they make the station a less attractive place to rob. Usually, though, it's used when the station's tanks are running low on fuel and they have to wait for a delivery.

    Managers don't want the tanks to go empty and have to turn customers away - it gives the station a bad rep and ticks off Corporate. Better to say "Limit x gallons/$" and keep the station open than to put up the "NO GAS" sign. Especially at a convenience-store-gas location: while people may come in to buy a soda or snacks, they're more likely to keep driving to the place further down the road. The staff still has to be paid, so it's an expensive lesson to learn.
    His stations sometimes limited cash purchases at night. Most were in small towns, though, and only credit purchase was available at night. Stores were closed but customers could use a card reader to buy fuel. My dad hated those in general, though, as the goal for convenience stores is always to get people in the door to buy soda and snacks--since that is where the profit is made, not on fuel. Fountain soda has the best profit margin in those places.

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