Prepaid debit credit cards, especially those with no monthly fees and direct deposit, represent a popular way for consumers to enjoy the convenience of a credit card without the debt and interest payments. Below is a summary of the best reloadable debit cards on the market. Simply click the card name to visit its official application.
If you’re one of the millions of Americans unable to qualify for a conventional credit card, a prepaid credit card may make sense for you, as they require no credit check and won’t report to the credit bureaus.
Although sometimes called prepaid credit cards, prepaid cards are often more like debit cards, and are often called reloadable cards because you can add money to the account the card draws from any time you’d like.
From the perspective of using the card, a prepaid card does work almost the same as a traditional credit card. Any merchant or service provider that accepts credit or debit cards will likely accept this form of payment, as well. Just check the processing network — e.g., Visa, Mastercard — to ensure your prepaid card transaction can be processed.
Where prepaid cards vary from traditional credit cards is in the setup and reloading.
Make a deposit account
A reloadable prepaid card requires a deposit account from which the card will draw money. In this way, they are similar to a debit card. However, unlike a debit card that draws funds for each individual transaction, most prepaid cards require you to move over funds in set amounts, somewhat similar to a gift card.
In other words, payments aren’t required for these prepaid cards — rather, you replenish funds through voluntarily “funding” the account. You can do this via a bank account transfer, PayPal account, direct deposit or even cash at many retail stores.
Helps keep finances in order
For people without a checking account, prepaid credit cards can work as a way to manage their finances. It’s simply not practical and not very safe to deal exclusively in cash transactions. By keeping their cash in a prepaid credit card account, they have access to it any time they want via ATM machines. They can also pay bills online and engage in other activities that require a digital payment.
Prepaid cards are good for consumers who simply want to make online purchases, but they're not good for consumers looking to build credit or establish a credit history, as they're not actually credit products and won't report to the credit bureaus.
Keep an eye on fees
One of the big deterrents to using prepaid credit cards is the number of fees associated with some of them. While most prepaid cards will have some sort of fees — the prepaid card issuer has to make money somehow — it’s possible to find prepaid credit cards that don’t charge as many fees and have a large network of free ATMs.
Watch out for cards that charge excessive fees, such as ATM transaction fees, bill payment fees, reloading fees, inactivity fees, statement fees and more. Depending on the card you choose, this can turn into a very expensive alternative to banking. Do your research and select a card that will fit your usage habits without charging you too much.
Pick the right card and you’ll have a great way to build good spending habits and decide whether you want to try a more traditional form of credit.
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About the Author
Ashley Dull Finance Editor
Ashley Dull is the editor-in-chief of CardRates.com, where she works closely with industry leaders in all sectors of finance to develop authoritative guides, news, and advice articles read by millions of Americans. Her expertise lies in credit cards and rewards programs as well as credit reports and how credit scores affect all aspects of consumerism. She is often asked to serve as an expert source on financial topics for national media outlets, such as CNN Money, MarketWatch, Money Matters, ABC News, and NBC News, and has recurring contributions to several leading finance websites. Connect with Ashley on Twitter and LinkedIn.
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