The Best Prepaid Credit Cards

Saturday, January 23rd

What Are the Best Prepaid Credit Cards?

Prepaid credit cards are a great resource for managing your spending while still getting the convenience of a traditional card. Because you deposit money to "fund" your prepaid card, it doesn't matter if you have a low credit score or no credit history at all. And, prepaid credit cards make it easy for parents to teach their teens about smart spending, without getting into financial trouble early on.

Why Do You Need a Prepaid Credit Card?

Picture this: you're 18 and in your first year away at college. Suddenly, you've got every credit card company known to man sending you enticing offers of low interest rates, guaranteed approval, and even shiny rewards programs to "make money" . Sounds great, right? Unfortunately, that's how a lot of people - young and older - start to have trouble with money management, with high interest rates on unpaid balances, late fees, and much more.

Prepaid Cards: A Safe Solution

Fortunately, there's a way to safely make purchases the same way you would with a traditional credit card, without the risk of getting in over your head: prepaid cards. Sometimes referred to as a "debit" credit card, these cards are funded by money you deposit in advance. You put in $500, you can spend up to that amount. Try to make a purchase that goes beyond what you've put in, and you'll simply be declined.

For that reason, prepaid cards are popular with parents who want to teach their teenagers (and young adults!) how to use credit wisely, with much less risk. Because these prepaid cards are issued by the same major banks as traditional credit cards, they can be used anywhere those cards are accepted - from gas stations to grocery stores and more.

Prepaid cards can also be given as a gift: unlike cash, these cards can usually be replaced if lost, and they give the recipient an almost unlimited array of choices where they can spend it. That gives this type of card a big advantage over gift cards that are tied to one particular store or company.

What To Look For In A Prepaid Card

So, if you've decided that a prepaid card meets your needs, what should you look for as you decide which specific card to get? Here are some criteria to keep in mind:

• Rewards. Many prepaid cards give you the same attractive points, cash back, or other incentives as a traditional credit card. Be sure to choose a card with rewards that are relevant to you. For example, getting a card that gives rewards points for grocery shopping might not be a great fit for a teenager that still lives at home, but perfect for a new dad or newlyweds.
• Fees. Many prepaid cards have costs associated with establishing and/or using them. You might have to pay a one-time fee to set up the card, or you may find monthly maintenance fees (usually around $5) for as long as the card is in use.
• Card Brand. Your prepaid card is only useful if it's actually accepted. MasterCard and Visa tend to be accepted by the widest range of merchants, with Discover and American Express being somewhat more limited.

TopConsumerReviews.com has partnered with Lending Tree to help you find the best Prepaid Credit Cards in the industry. We hope this information will help you select the perfect card to help you manage your spending - or to give as a gift!