Looking for the best place to purchase a prepaid credit card? In a nutshell, there are a number of different places that offer prepaid debit cards but to compare prepaid credit cards easily simply use our free credit card “Chaser” too to find and compare the best credit cards in a snap and then read on to learn some of the specifics of how to purchase the best prepaid credit card.
The idea of a prepaid credit card runs contrary to the basic premise of a traditional credit card. Credit cards by nature are not prepaid, but are short-term loans with a revolving style of credit limit. A prepaid credit card is not based on credit worthiness or on any type of loan situation. Credit is not extended to the card holder, which is to say that using a prepaid card doesn’t count as a positive credit item.
Instead, a prepaid credit card functions as a gift card, whether it is offered by a store or even a major credit card company. The cardholder is free to spend money that has already been stored into an account. The card may have been pre-purchased by the card holder him or herself or may have been paid for by a relative or an employer. The point is, these funds have been previously deposited into a secured account created exclusively for the customer.
This may be confusing, as a major credit card name will usually appear on the card, as if it were a real revolving credit card. However, this is primarily for branding purposes and banking use. The cardholder can spend all of the deposited funds up to the predetermined card limit. There is no such feature as overdraft protection with this type of card.
The Benefits of Pay in Advance Cards
One of the reasons prepaid cards are so popular is because they can be issued to minors, and yet they carry no opportunity for falling into debt, since there is no credit line involved. (You know how kids like to impulse-buy!) Teenagers also enjoy having these cards, as they can make card purchases independently without the consent of their parents.
While these cards can be considered “secured” they don’t operate like a typical secured credit card account. For example, you wouldn’t have to come up with a $500 deposit just to open the account. Furthermore, you are not charged interest based on your purchases. You may still incur purchasing fees or monthly fees, however. Minimums for prepaid cards can be as low as $20.
Prepaid credit cards from banking institutions are typically issued in the name of an individual account holder. This is different from store cards, which are often times issued anonymously. This brings us to an important point…
Where Can You Find These Cards?
Your first option would be in a merchandise or department store. The store card allows the cardholder to make purchases directly from the store in which the card was issued, or perhaps from any location that is part of a store chain. In this case, the funds and data are physically stored on the card, not from a national or local bank. The card is accessed using a magnetic stripe (or sometimes a computer chip) that has been embedded inside the card. In some cases, there is numerical data on a card which must be entered manually into the computer. You can find prepaid store cards directly in the store you are shopping. They may be openly displayed as “gift cards” or you may have to ask a sales clerk or manager for an application. (Note: this will be a different type of application than a revolving credit account; it mainly requires contact information for the card itself).
There are also prepaid cards for long distance or public telephone use as well as transit system cards. Telephone cards can be purchased in the company store directly, (AT&T, Sprint, T-Mobile or Verizon) at a large consumer store (such as Wal-Mart or Target) or you can request a card through a company’s website. Cards for public transportation are available from train or bus stations, some department stores, online and in some cases, from vending machines.
Travel cards operate similarly to traveler’s checks and basically allow you to store large amounts of money for your upcoming trip. Make sure these cards are associated with a commonly accepted card like Visa or Master Card. (Amex and Discover are not always globally accepted)
Payroll cards are another type of prepaid card and they are issued by banks to employers for salary payments. They conveniently replace the need for checks and are considered “reloadable” cards, capable of being spent and filled again, and even used for cash withdraw at ATM machines.
Where can you purchase prepaid cards for use with multiple stores? You will often see these cards in the malls, the local gas stations, or in department stores as well as check-cashing outlets, banks, and other financial institutions in person or online. (Look for them by the cash register, counter, or ask the nearest clerk where they are located) It should be noted that when applying for these cards in person, you or the person you are buying the card for may have to appear at the counter. After successful review, the company will either issue a physical card in person or will send the card through postal mail.
Major credit card companies like Visa and Master Card also offer a type of prepaid card, and these companies can be accessed directly online or through mail. (You know, those pre-approved advertisements you have sitting around in your living room!) The advantages of using a prepaid Visa or Master Cards lay in the fact that these cards are universally accepted wherever you go. They are also renewable and feature flexible terms.
Some Considerations before Buying a Prepaid Card
The major difference between prepaid cards and gift cards is that the latter are not considered reloadable cards. They might also be referred to as closed system cards. They offer limited flexibility in most terms, and little security, but have hardly any fees attached. Reloadable cards are slightly different than open system cards, which are often marketed as “prepaid debit cards.”
Bear in mind however, that there is no such thing as a prepaid debit card, by definition. For the most part, these accounts do not affect credit scores, nor is there any value in the physical card itself. Multi-purpose cards are distinguished by the fact that the value is stored on the card, because the card number is recorded in a central database.
Though these cards are easy to find, most do incur fees, so you might want to thoroughly read the contract and compare various company plans before agreeing to a purchase. Paying your bill in advance lets you enjoy a guilt-free spending spree. You can use the credit card “Chaser” tool above to purchase a prepaid card today, and indulge in your favorite pastime while protecting your credit score! Get started comparing the best credit cards today!
