About prepaid cards

The most important thing to know about prepaid cards is that they are not credit cards, but they can offer many of the benefits that credit cards offer, at least as far as consumers are concerned.

Prepaid cards do act much like credit cards but, in reality, are debit cards. This type of card can bring many benefits, including (but not limited to):

• Make budgeting easier
• Reduce the chances of getting into debt
• Help avoiding finance charges

With prepaid cards, the cardholder determines the credit line. With most prepaid cards, a cardholder’s credit line simply depends on how much money he/she transfers to the card. Because of this, the risk of running up credit card debt is eliminated, while budgeting can also be made easier.

Although prepaid cards do not charge finance fees, other fees may apply, including (but not limited to):

• Application fees
• ATM fees
• Monthly fees
• Over-limit fees
• Reload fees

Be sure to thoroughly look over the terms and conditions for each specific card before applying. Choosing to use a prepaid card can be a great idea for those who are looking to budget and/or avoid costly finance charges. But be aware of any fees that may apply to using the card so that you can use the card effectively and efficiently.

Recommended resource: Compare prepaid cards