For people with no credit or limited credit files, it can be...
Prepaid Credit Card FAQ
See our list of the most frequently asked questions about prepaid cards
Q: What is a prepaid card?
A: A prepaid card is a reloadable credit card that comes with certain debit card features. Cardholders load money onto the card and can't spend above the available balance at any time.
Q: What purchases can I make with these cards?
A: Prepaid credit cards can be utilized to pay for virtually any purchase. This includes groceries, gas, hotels, and even car rentals. If a merchant accepts the payment network backing the card, it can be used at that particular business to fund a purchase.
Q: Do prepaid cards report to the credit bureaus?
A: In general, balances on a prepaid card are NOT reported to the bureaus. Account owners fund the card themselves rather than being extended a line of credit. The rare exception is Account Now card that is known to be reporting to credit bureaus.
Q: How do I fund my account?
A: Different funding options are available with each card. However, bank transfer and direct deposit are universal options. Some accounts can be funded by debit card, and others are reloadable through various retailers.
Q: Can I withdraw money from an ATM?
A: Most prepaid cards come with a Personal Identification Number (PIN), or users can set their own PIN. This allows cardholders to make withdrawals at ATMs.
Q: Do prepaid cards offer purchase or fraud protection?
A: Since prepaid cards are offered by the major card issuers, they often feature purchase and fraud protection. The later is almost always offered on these cards. Plus, balances are usually FDIC-insured.
Q: How much can I expect to pay in fees?
A: Each prepaid credit card comes with its own schedule of fees. Unfortunately, some cards cost far more than others to maintain. It's important to look for a card that doesn't charge too many maintenance fees.
Q: Do prepaid cards require a credit check?
A: Luckily, the biggest draw of prepaid cards is the fact that no credit check is required. These accounts are perfect for individuals with poor or no credit.
Q: Why should I consider a prepaid credit card?
A: Not everyone owns a high enough credit score for a credit card; others can't open a checking account for one reason or another. In the end, prepaid cards are designed to accommodate individuals with bad credit. They can event act as a checking account alternative or replacement.
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