Prepaid debit cards look like a credit card and can be used in most of the ways that credit cards are used.  Typically, hotels and car rental agencies will not allow you to use a prepaid debit card to secure your rentals, but most other purchases in stores, restaurants, and online can be made with a prepaid debit card just as with a credit card.

However, there is no actual credit involved in a prepaid debit card.  Instead, you have to pay the available balance on the card in advance.  For example, if you buy a prepaid debit card with $200, you can then spend $200 with that card before, but no more.  No debt is incurred since you have prepaid and you are using the funds out of a prepaid account.

Some cards allow you to continue to refill them on an ongoing basis.  The most advanced credit cards even will allow direct deposit of your paycheck and the ability to check your credit card balance online or by phone.  It’s known that tens of millions of Americans have no regular banking relationship and are willing to use pre paid debit cards to make purchases and pay bills instead of using a checking account.

Most often these cards are sought by people whose poor credit prevents them from getting a regular credit card and still need or want the credit card services.  Or, people who do not have a debit or cash card associated with a checking account.  There are a number of benefits for people whose credit is poor, and they include:

Budgeting monthly spending so that you only spend what you have.

Avoiding interest rate charges that apply to regular credit cards.

Debt avoidance.

Limiting your spending by loading only what you must spend.

Using the card to rebuild your credit if the issuer of the card reports your card use to credit agencies.

You can buy a card in a number of ways.  You can go and look for a credit card online and fill out the credit card application conveniently and review the various card features with their corresponding terms and conditions.  Drug retailers like Rite Aid, CVS, and Walgreeens will typically stock basic cards that you can fill up with cash right at the cash register.  Prepaid credit cards purchased at banks typically have more features but are no more valid that the ones you get at Walgreens.  Do a search for prepaid debit cards or go to a site like  Wal Mart has a significant presence in full-featured prepaid cards.

As always, read carefully before handing over cash for a prepaid card.  If you simply want a credit card for limited use, those are available everywhere.  If you’d like a card with more features, go to a bank and ask about options.  Remember that many times there are fees associated with the card.  The initial purchase of the card may cost $5.00 or some other small amount, and refilling the card may also cost money.  Using the card in itself may engender a fee, and it’s possible that a monthly maintenance fee will be charged by the issuer.  Most of these fees are less than $5.00 but you can be surprised if you don’t know about them in advance.  As with all financial matters, shop, compare and evaluate the terms before you choose the card that is best for your needs.

If the prepaid credit card is not your top choice, remember there are a number of credit card companies flooding the market with credit card offers.  These credit card offers include products that offer the best credit card rate to those that are simply bad credit cards and everything in between.  When reviewing the features of a new credit card be careful to find the features that meet your needs, not those of the credit card company.

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