Alternatives to Prepaid Cards

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Credit Card Applications » Research » Guides » Building Credit History » Alternatives to Prepaid Cards

Alternatives to Prepaid Cards


Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.

Prepaid credit cards allow the consumer to make credit card like purchases without having an actual credit card. These prepaid cards are perfect for young children as well as adults who for whatever reason does not have a bank account or doesn`t have good credit.

Prepaid credit cards are not exclusive, and in fact almost anyone can get one. This is because they are not credit cards. Prepaid credit cards act like gift cards, because they deduct money that has already been "loaded" onto the account. Consumers who are interested in a prepaid card, must refill or load their card when funds become low at their bank or at designated loading stations.

Although prepaid cards can`t be classified as a real credit or debit card, the banks will charge you like they are. Beware of overdraft fees, because prepaid cards will still charge you those. Choosing a prepaid account can be a little bit of an ordeal, because there is so much fine print and not to many know about the cards.

In fact, many consumers head down the prepaid credit card road once they feel like they have exhausted all their financial options. But there may be some other ways to enjoy the benefits of a plastic card, without going down the route of expensive prepaid credit cards.

Here are some alternatives:

  • Go to Your Local Credit Union. These places are not as large as the big banks and are a little bit more lenient on lending. Credit unions might extend a line of credit on a debit card or sign you up for a low interest credit card that suits your needs. Credit unions resemble a home environment, more so than big banks, and they may be more likely to help you with a smile.
  • Try a Rewards Debit Card. A rewards debit card is like a debit card, just a little fancier. Just like a prepaid card, you put the money into the account (without a fee), and the card gives you back anywhere from one to two percent of your purchases back into your account. For example, Wells Fargo has a Way2Save account that links with your debit card that automatically puts $1 aside in a savings account every time you use your debit card. When setting up a rewards debit card, don`t forget to ask the necessary questions, as always. Some of rewards accounts require a minimum balance for you to earn rewards.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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