Review featured cards from our partners below. Advertiser Disclosure †
One of the newest and most successful financial products is the prepaid debit card. Millions of people have purchased these products for personal use, and their uses include payroll and allowance. There are dozens of prepaid cards on the market, all with different features and fee structures.
They all, however, have a few things in common. First, you don't need good credit to get one. You simply load money onto the card and then spend that money in much the same way as you would with a credit card or debit card linked to a bank account. Second, prepaid debit cards do not help users build credit since no one is lending you any money. So if you're looking for a tool to help you build your credit, this will not do the job. (Check out secured cards for that.) Back to top.
Prepaid cards are particularly appealing to people who can't get a bank account. The underbanked -- as they are often called -- often load their paychecks onto their prepaid cards and then use the cards as they would a bank debit card. Other people who may find prepaid cards appealing are those who frequently get hit with credit card fees for going over their credit limit or paying late. If you tend to make mistakes like these, a prepaid card may save you money in the long run. Although prepaid cards do have fees, over time they may not add up to as much as the over-limit and late fees. Back to top.
Although you pay for a prepaid and a gift card before the money can be spent, prepaid debit cards and gift cards are not the same. Gift cards are covered by the Credit CARD Act, which limits fees; prepaid debit cards are not. Prepaid cards can be used anywhere that accepts the brand (Visa, MasterCard or American Express, for example) and are not merchant-specific, as gift cards often are.
Prepaid debit cards are reloadable, and you must register your card, giving your name and address. Gift cards do not require that users register their cards (though it's a good idea, as you may have some recourse if your card is lost or stolen) and cannot be reloaded. Back to top.
In terms of making purchases, prepaid cards can be used like any other credit or ATM cards. If you're not sure if you should get a prepaid debit card to begin with because you don't know if your credit is good enough to qualify for a traditional credit card, then you can use a tool like Credit.com's free Credit Report Card. It provides a clear breakdown of your credit standing, along with your free credit scores. It will also match you with credit cards for which you are likely to qualify. You can also use a credit card comparison tool, like this one, and filter the results to show only credit cards that match your credit profile. You can even use the tool to search for prepaid cards. Once you have your results you'll be able to compare the cards' fees and features. Back to top.
*For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While Credit.com always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
** FICO scores and credit scores are used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any credit card offer.
†Advertiser Disclosure: The credit card offers that appear on the website are from credit card companies which Credit.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The site does not include all credit card companies or all available credit card offers.