All You Need to Know on Reloadable Credit Cards
Reloadable credit cards aren’t, by definition, actual credit cards. While they often have major credit card logos on them, they are actually prepaid debit cards. However, this doesn’t mean a reloadable card can’t come in handy. For instance, you might not want to accumulate debt, but you still need a card to use for certain purchases. Plus, many consumers feel a bit safer and more secure when they use reloadable cards, especially when shopping online.
Here’s everything you need to help you understand how reloadable cards work and how you might be able to use one. Plus, we have included our recommendations for the best reloadable and prepaid cards available.
Since prepaid cards are issued to be compatible with a payment network like VISA or MasterCard, they can be tailored for regular use. Most prepaid card providers allow you to use a prepaid card just as you might use a debit card tied to a bank account. You can use your prepaid card account for a wide variety of purchases ranging from completing bank transfers to serving as a destination for your employer’s direct deposit. This is in addition to being able to use these cards for regular purchases at retailers if they have a Visa or MasterCard logo.
Benefits of Reloadable Credit Cards
There are a number of reasons that working adults use reloadable credit cards- they are the easiest cards to get, for example. Parents also appreciate the option when it comes to teenagers who need access to cash — especially older teens and those in college.
Carrying a reloadable card can be much safer than carrying cash. Most major card issuers offer at least some consumer protection in the form of deposit insurance, ensuring you won’t experience a total loss if your card is lost or stolen. Since most aren’t linked to your social security number or a separate bank account, a lost card won’t automatically mean all your personally identifying information is compromised.
While you don’t have to have a bank account to have a reloadable credit card (millions of Americans don’t), you can also use your card to protect your assets while traveling. Putting your travel money on a reloadable card affords you the same ability to spend when you travel domestically and internationally while protecting the assets you have in your bank account.
Prepaid cards are also ideal for teaching your kids and teens about money management. Your teens can use the card to buy the things they need, especially while at school, but won’t be able to go over the card’s loaded limit. This is a perk for adults, too, of course. You’re basically forced to spend within your means without fear of overdrafts, additional fees, and the stress of overwhelming debt.
Do you have poor credit? Reloadable credit cards allow you to make transactions online and in places where credit cards are required without having to apply for a credit card limit with an astronomical interest rate. For people with bad credit, reloadable cards can be especially convenient since there are no credit checks and you can purchase without hassle.
What to Watch Out for with Reloadable Cards
As with any financial product, it’s important that you read the terms of the reloadable credit card you are considering. These cards are definitely not the same as other types of credit cards and do not always come with the same protections as traditional debit and credit cards.
Although some cards offer deposit insurance, since they are not necessarily held by banks they may not have to offer 100% protection against theft or fraud
Further, the associated fees can be expensive. Some cards will charge you a flat rate of $2 just for using an ATM — and that’s in addition to the fee the actual ATM owner will charge you. Depending on the card, you could end up paying as much as 20% just to add money to your card. This means it’s going to cost you much more to make money available for paying bills or other purchases.
Something else to keep in mind is that while these cards are great for enabling people with bad credit to make online purchases, those purchases will not help you to rebuild your credit. While reloadable and prepaid cards don’t require a credit check, they also don’t report your payments to credit bureaus.
If rebuilding (or building) your credit is your main goal, you’ll need to apply for a “secured” credit card. The concept is similar, but instead of loading your card with funds, the card issuer holds a security deposit in the event you default on your account. As you use your card, your activity is reported to the credit bureaus. You will still need to make regular, on-time payments to rebuild your credit score, but over time, a secured card can help.
Walmart Reloadable Card
There are many different types and brands of reloadable cards. One of the most popular is issued by Walmart. The Walmart MoneyCard comes with either the Visa or MasterCard logo and has the “debit” indicator on it as well. While this card includes its share of fees, the perks are amazing when compared to other reloadable cards.
The Walmart MoneyCard includes protection against unauthorized transactions because the card is issued by the FDIC-insured Green Dot Bank, but some card features are only available to you if you register and receive a personalized card.
You can use the Walmart card to pay bills without being charged a fee, and you can send money to others who have cards issued by the Green Dot Bank. This card also lets you use your smartphone to deposit checks, and you can order personalized checks for bills that require paper checks such as your rent. While there are some applicable limits, you can also visit a Walmart customer service desk or MoneyCenter to withdraw cash without any additional fees.
The fee plan is one of the simplest in the industry. Some of the fees include:
- $1 to purchase the card
- $5 monthly fee to keep the card (unless waived)
- $3 for a Rapid Reload (no fee for direct deposits of payroll or government benefits or Walmart check cashing)
- Up to $4.95 to reload with cash on the Green Dot Network
- $2.50 to use a regular ATM
- $.50 to get a balance inquiry at a regular ATM
- $3 to replace a lost or stolen card
As a bonus, you can earn up to $75 per year in cash back. The cash back is awarded at the end of the 12-month period of card ownership. After the 12-month period, you can use your associated app to claim your reward, which will automatically become part of the balance on your card. A few of the perks that go toward your cash back reward include:
- 3% on purchases made at Walmart.com
- 2% on purchase made at Murphy USA or Walmart fuel stations
- 1% on purchases made in Walmart stores
It should be noted that there are very few reloadable or prepaid cards which include the ability to earn cash back.
Other Popular Reloadable Cards
Although the Walmart card is one of the most popular, there are many other options available to choose from, according to your needs. Some of top reloadable and prepaid cards include the following:
Backed by one of the most popular credit card issuers in the world, the American Express Serve Cash Back card is a reloadable card worth considering. In addition to the benefits you get with a prepaid card, this card also allows you to earn 1% cash back on purchases with no credit check, no minimum balance, and no fees. It also comes with free direct deposit, free ATM withdrawals at more than 24,000 ATMs, and the ability to use the card wherever Amex is accepted.
Green Dot Cash Back Visa Debit Card
Green Dot is a popular provider of prepaid and debit cards. This card awards 5% cash back on purchases up to $100 per year. There are other benefits including no overdraft fees, free direct deposit, and a chance to win a $5,000 Payday Bonus when you make a purchase at least once before next Friday.
The ACE Elite Blue Visa includes access to your direct deposit payment up to two days earlier. You also get access to the ACE Elite mobile app and can transfer funds to other ACE Elite cardholders without paying any fees. You also earn up to 5.00% APY on balances up to $1,000 with a savings account.
24k Prepaid Visa RushCard
The 24k Prepaid Visa RushCard also gives you access to your direct deposit two days early. Your funds are FDIC-insured through MetaBank. There is also no minimum balance required or credit check. Plus, your funds are protected if they are lost or stolen.
While there is a lot to consider when opting to use a reloadable credit card instead of a traditional credit card or bank account, there are quite a number of perks you may find beneficial as well. Be sure to compare the terms and fees to ensure you are getting the best deal possible.
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