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Prepaid credit cards

Discussion in 'Off The Beaten Track' started by ice dance, Jun 25, 2011.

  1. ice dance

    ice dance Member

    Please, oh wise FSUers, tell me all about prepaid credit cards. Fees, are they widely used, etc. Thanks in advance.
    Vash01 and (deleted member) like this.
  2. Civic

    Civic New Member

    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.
  3. Prancer

    Prancer Strong and stable Staff Member

    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.
  4. made_in_canada

    made_in_canada INTJ

    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 ;)
  5. Skate Talker

    Skate Talker Replaced the display under my name

    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.
  6. Japanfan

    Japanfan Well-Known Member

    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.
  7. mysticchic

    mysticchic Well-Known Member

    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.
  8. Norlite

    Norlite Well-Known Member

    I believe Skate Talker is thinking of a Visa or MC gift card, not a pre paid CC.
  9. Aceon6

    Aceon6 Hit ball, find ball, hit it again.

    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.
  10. Vash01

    Vash01 Fan of Yuzuru, Medvedeva, T&M, Shibs, P&C

    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.
  11. BigB08822

    BigB08822 Well-Known Member

    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.
  12. PDilemma

    PDilemma Well-Known Member

    Using a debit card for gas does this as well.
  13. BigB08822

    BigB08822 Well-Known Member

    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.
  14. Anita18

    Anita18 Well-Known Member

    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.
  15. numbers123

    numbers123 Well-Known Member

    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.
  16. Anita18

    Anita18 Well-Known Member

    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. :p
  17. FigureSpins

    FigureSpins Well-Known Member

    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: Jun 26, 2011
    kwanfan1818 and (deleted member) like this.
  18. PDilemma

    PDilemma Well-Known Member

    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.
  19. FigureSpins

    FigureSpins Well-Known Member

    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.
  20. PDilemma

    PDilemma Well-Known Member

    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.
  21. numbers123

    numbers123 Well-Known Member

    Uh, up and down 72nd street, up and down 84th street to name a few. And in CB on Veteran's Drive
  22. Skate Talker

    Skate Talker Replaced the display under my name

    Yes, you are correct - it was a Visa Gift Card. Anyway thanks to everyone for all the interesting information on this thread. Many things I did not know so this has been very useful.
  23. PDilemma

    PDilemma Well-Known Member

    That's why you stay out of Counciltucky. Northwest Omaha does not do this.

    I would guess it has to do with something other than high prices, as FigureSpin said.
  24. numbers123

    numbers123 Well-Known Member

    I had some comments, but they are not printable.
    Prancer and (deleted member) like this.
  25. PDilemma

    PDilemma Well-Known Member

    Oh, take a breath. I don't like Omaha either. Living there with the traffic and congestion and the people who have never seen a cow outside a petting zoo and think farming is unnecessary and the state does not exist or matter west of Lincoln was horrid. And Lincoln is possibly worse since they can't manage their traffic and their city planning is a disaster. And I practically grew up in Lincoln.

    If the opportunity presents itself, I'd love to move back to the central part of Nebraska.
  26. numbers123

    numbers123 Well-Known Member

    PD there is so much wrong with your statement, but I can appreciate it is your POV. You make assumptions about who or what I believe or my experiences that are no where near the truth.

    Anyway, back to the topic - an interesting read on pre-paid credit cards/debit cards or store cards. In part

  27. victoriaheidi

    victoriaheidi New Member

    When I was 12, my grandfather gave me a prepaid AmEx. The only complaint I had is that the card automatically deducts a service fee of $2 a month after 12 months. At 12, I was barely allowed to go to the mall by myself (there's no "walking to the mall" in Los Angeles), so I didn't spend the money that quickly, and I lost about $10 in service fees.

    AmEx cards also cost $25 to buy the card (or something like that).

    Either way, I loved the card. It was a really great entrée to the "big world" of spending money, and it was a lot safer than a debit card (because it wasn't linked to a bank account).
  28. Artemis@BC

    Artemis@BC Well-Known Member

    The only annoyance I've found with pre-paid credit cards is if you try to buy something for an amount more than the balance of the card. They may have fixed this flaw since, I remember trying to purchase, say, $60 worth of stuff and having a $50 pp card. The store's computer couldn't figure out to deduct $50 and then ask for another $10 from me -- it simply wouldn't work at all, unless the cashier manually punches in $50, then asks for the balance. That's bad enough if you have the full amount on the card, but if you've used it earlier to buy $12.31 worth of stuff, you have remember the balance, then tell the store cashier to apply only $37.69 to your purchase.

    Yes, you can get the balance online and/or by phone, but still annoying.
  29. kwanfan1818

    kwanfan1818 I <3 Kozuka


    The authorization hold lengths differ by transaction category. Most authorizations clear with 72 hours -- either a charge is settled or hold on the credit limit is cleared. Hotels are in a different category, and can keep the hold much longer, but not indefinitely. I've stayed in hotels for weeks at a time where I've had to settle my account when the bill reached a certain limit (India) or weekly (a B&B in Dublin).
  30. FigureSpins

    FigureSpins Well-Known Member

    Very true. The other mistake many bean-counters make is in changing 24-hours stations to 18-hours if sales are low during the overnight. We learned the hard way that a clerk can help prevent theft and vandalism during those hours and it's cheaper than paying a security guard. One station was trashed and robbed while it was closed. The stolen cartons of cigarettes were worth more than the computer they took. Station went back to 24-hours the next day.

    That's still an issue. We had two $50 Mastercard or Visa cards that we tried to use for an $80 dinner at Benihanas. The waitress kept trying to charge $80 against each of the cards. We were really embarrassed because she came back to the table and announced that the cards had been "declined." Well, duh, they said "Max charge $50" right on the card! We had no trouble using the cards elsewhere - the clerk knew to only charge $50 to the first card and then the balance against the second card. No problem.

    I used a permanent marker to record the balance on the card itself, so I knew what was left.