You just load dollars directly onto the card and then use that balance for purchases. Unlike traditional debit cards, you don’t need a bank account to use a prepaid card. Fee structures vary, so it’s important to read the disclosures. Unlike credit cards, which by law must disclose their terms and conditions upfront, no regulation forces prepurchase disclosure of fees on prepaid cards.Īccording to the Consumer Financial Protection Bureau, some of the common fees associated with prepaid cards include monthly fees, transaction fees, inactivity fees and even fees for paying bills. One downside of prepaid cards is hidden fees. Since prepaid cards are associated with major card networks - Visa, Mastercard, American Express and Discover - they can be used anywhere debit cards can: to buy groceries, fill up on gas and even pay bills online.
This means you won’t pay interest on a prepaid card as you might with a credit card. They are technically debit cards – when you use them, you’re spending your own money, not the bank’s. Prepaid cards look like credit cards and spend like credit cards, but there’s no credit behind them. Here’s what you need to know about general prepaid cards: how they work, when to use them and how to get one.
Thinking about picking up a reloadable prepaid card? There are more than a dozen types on the market now, and plenty of variations that can make them a wonderful or terrible financial choice.