Many credit card companies are now offering a prepaid version of their credit cards. Of course, when it is prepaid, it is not really a credit card per se.
Prepaid ”credit” cards can be handy in many different situations, and it is not surprising that they have become so popular. They use the same payment networks as the traditional credit cards, so you can use them in shops online and offline that accepts credit cards and debit cards. Some prepaid credit cards even come with a cash-back plan similar to the ones offered for standard credit cards.
Many clinics that pay for blood and blood components are now using prepaid credit cards instead of paying cash. This is advantageous for the clinic since they do not have to handle cash, and a cash-free office is safer for the staff. If it is advantageous, neutral or downright horrible for the pay recipients will greatly depend on the exact terms and conditions for the specific card.
Before you accept payment in the form of a prepaid credit card, make sure you understand the terms and conditions. Some prepaid credit cards are great for the user, while others come with rather predatory rules, including a fee structure that can bleed your card dry in no time unless you are very smart about how you use it.
Here are a few examples of things to look out for:
Some prepaid credit cards have no transaction fees, while others charge for every transaction. There are also those who allow one fee-free transaction before they start charging you, making it beneficial to spend all the money in one go to stay clear of the fees.
Also, is the fee the same for online payments, purchases in brick-and-mortar stores, over-the-phone transactions and withdrawals from the ATM? Make sure you know beforehand exactly how the transaction fees structure works for this particular prepaid credit card.
Warning: Be aware that some issuers will charge the card a transaction fee even if the transaction itself is denied (e.g. due to insufficient funds).
Some prepaid credit cards will charge a fee every time you do a balance inquiry.
How you can make a balance inquiry also varies. Some issuers are very forthcoming and will allow you to do an unlimited number of free balance inquiries through a multitude of methods, including logging in to their site online, calling a toll-free number or using a text message service.
Some prepaid cards will charge an inactivity fee if the card is left inactive for a longer period of time. Exactly what a ”longer period of time” is will vary from one card to another, so check the fine print beforehand to avoid an unpleasant surprise.
ATM withdrawal multiples
If you plan on using your prepaid credit card to withdraw bills from an ATM, make sure you know which multiples are permitted. Even though the ATM itself might be capable of withdrawals as small as $1, the card issuer may stick to other rules and only allow withdrawals in multiples of $20. So, if you have $50 on your card, you can only withdraw $40, and $10 will get stuck.
Some prepaid credit cards are charged a monthly service fee, even if you aren´t using any services. You pay simply for the card to exist.
Can I choose my PIN?
For security reasons, many prepaid credit cards come with a PIN. This PIN can be fixed, or be a PIN you get to choose yourself the first time you use the card. Naturally, remembering a PIN one selected for oneself is easier for most of us.
Is there a cash-back program attached to the card, and if so, how does it work?