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by Answerbag Staff on February 4th, 2010

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What are prepaid credit cards?

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Answers. 2 helpful answers below.

  • by Jeannie Knudson on February 4th, 2010

    Answerbag Experts

    Great Answer

    Professionally Researched. (What's this?)

    Prepaid credit cards offer individuals without credit cards or bank accounts a means of cashing or depositing checks. Additionally, prepaid cards can be used for most services requiring a major credit card.

    Facts

    You can purchase prepaid credit cards online, at most banks or at many major retailers. Once you have the card, follow the instructions on the back to activate the account and load money onto the card.

    Uses

    Prepaid credit cards are useful for individuals who don't qualify for unsecured credit cards. The cards are often given in lieu of regular credit cards to teenage or college-bound children by their parents.

    Pros

    The cards require no credit check, making them available to individuals with poor credit. There are no interest fees and the danger of going into debt is eliminated as you can only "charge" up to the balance in the account.

    Cons

    Prepaid credit cards are more expensive to maintain than regular credit cards or debit cards, and not all businesses accept them. Depending on the card, there may be set up fees, loading fees, depositing fees, withdrawal fees and a monthly maintenance fee.

    Considerations

    As prepaid cards don't require a credit check, most issuers don't report your activity to credit reporting agencies. If you plan to use a prepaid card in hopes of raising your credit score, ask the issuer if it reports to credit agencies before signing up for its services.

    Source:

    Credit: Pros and Cons of Prepaid Cards

    Ask Mr Credit Card: Guide to Prepaid Credit Cards

    Consumer Action: Banking and Prepaid Cards

    More Information:

    Bankrate.com: Are Prepaid Credit Cards a Good Idea?

    Smartmoney.com: The Pitfalls of Prepaid Cards

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  • by Twisted Taco on February 11th, 2010

    Twisted Taco

    A credit card that is prepaid

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