Are Prepaid Credit Cards Worth It?

Posted on 02. Jan, 2006 by in Saving & Investing

The concept behind prepaid credit cards is easy: you purchase a prepaid credit card that can be “loaded” with money and is indistinguishable from a normal card and can be used anywhere a credit card can. The appeal of these cards is that you can obtain one with little or no credit because there is no real “credit” involved. And since almost everything these days requires a credit card (reserving hotel rooms, purchasing anything online, etc.), these cards are a perfect solution.


  • They’re extremely easy to get. You can purchase a prepaid credit card online or at many local retail stores with no credit check or income requirements.
  • All you have to do is fill out a short application, pay a small set-up fee, and load the card with cash (this amount will be your “credit limit”).
  • They make great gifts for teens or children in order to help control their spending.
  • There are no interest charges or late fees. When you use your prepaid MasterCard or prepaid Visa, you’re not borrowing any money. The fact is you’re using your own money so you pay no interest!
  • Prepaid credit cards can’t get you into financial trouble or lead to credit problems, which is probably why you need a prepaid card in the first place. Since you aren’t borrowing any money, you can’t go into debt.
  • You can use them almost anywhere. A prepaid MasterCard or VISA can be used virtually anywhere VISA and MasterCard are accepted.
  • Some cards report to credit agencies – allowing you to rebuild credit.


  • They’re expensive. You’ll usually pay a set-up fee (typically $5 – $50) when you first open the account. After that, you’ll have to pay a fee of $5 or more each and every time you “load” more money onto the card.
  • Compare this to today’s regular credit cards which rarely charge a set-up fee or annual fees. Of course, not having to pay interest can help offset these charges a bit.
  • You have to have cash up front to load the card before you can make a purchase with it. Of course this can actually be considered an advantage depending upon your perspective.
  • Some prepaid credit cards cannot be used to make automatically recurring payments, such as a monthly subscription to an online service.

Check out this list of prepaid cards at Here you’ll get just an idea of the types of cards out there. However, there are many other sites and local stores that offer prepaid cards. But please remember that regardless of whether your credit card is prepaid or not, be sure to make wise purchases.

2 Responses to “Are Prepaid Credit Cards Worth It?”

  1. Henrique Plöger Abreu

    03. Jan, 2006

    this is a good written , easy to read and informative article, well done.

  2. Ryan Fowler

    25. Jan, 2007

    i just want a card with out worrying to much just to put money on and take money off thats it.

Leave a Reply