What I like about debit cards is that they allow you to make purchases in many places where regular credit cards are accepted but you have the advantage of not needing to borrow money or having to carry a balance like you would a regular old credit card. But remember that you would need to fund a prepaid card before you can use it since these cards don’t extend you a credit line. Loadable cards allow customers to spend cash with the convenience of plastic.
Absolutely. These cards let customers load and reload cash into an account that you can access easily. You can then make secure online purchases without accumulating debt. The best thing about these cards is the no interest feature because there are no revolving balances. Instead of utilizing a line of credit to make purchases, customers are using their own money. I also believe that debit cards are much safer than using cash because you are protected from unauthorized transactions and loss of funds due to theft or loss of the card under consumer protection regulations.
Note that ordinary debit cards are typically linked to your bank account and aren’t intended to help you build credit. On the other hand, prepaid cards are reloadable cards with their own accounts and may, in some cases, be used to help you establish credit.
On your last point on ordinary debit cards vs reloadable cards…
Help me get my mind around this. What, exactly, would get reported to the credit bureau? If you buy one of these at Wal-Mart, for example, the issuer wouldn’t even know who you are, correct? I could pay cash at Wal-Mart, go next door to Barnes and Noble, use the card to pay for my purchase, and walk out the door – completely off the grid.
Even if the issuer does have my indentifying information, what is there to report? There’s really no concept of a bill that is “due”, since it’s a pay up-front concept.
You’re not the first person to say that these cards can help build credit, so I’m wondering if I’m missing a key fact.
There are some prepaid cards that may also offer a “credit builder” feature. Take for instance the “Account Now” prepaid cards. Their application page also references a “free credit builder” feature and the possibility of applying for and receiving a line of credit. Check out the Account Now cards on the list above.
PRBC is a bit different than the other credit bureaus. I was thinking that the prepaid card activity was somehow being sent to the 3 main bureaus, and I was struggling with that concept.
The line of credit is just a loan, of course, so it makes sense that this activity would be reported to all bureaus.
@Kosmo,
I guess with prepaid cards you are given a “test” of what happens with using a card. I look upon them as a transitional step to moving to regular credit cards. Interesting that there are credit bureaus beyond just the three main ones.
Prepaid Visa cards are great for online shopping safety as well. Obviously, I would say that the general consensus is that it’s now safe to use your cards on well known sites, like Amazon etc. But for those of us, like myself, who hate the idea of using a card associated with a bank account on any smaller, lesser known website, then using a prepaid card is a good backup plan. In the UK, the mobile phone provider, O2, has one and I know that Paypal has one too. If you can just apply the amount you are going to spend, you have less to worry about in terms of security online.
I know so many people who have had bank account problems relating to online fraud, that I will personally onlyuse a card associated with my bank account on few shopping sites – and always the bigger, well known ones.
DeerJanuary 15, 2010 at 7:57 am
I’ve seen so many pre-paid credit cards recently. At first I was wary because they only seemed to be offered by unknown companies, but now larger, well-known companies have started offering them so I’ve been wondering if they are a good idea.
I like MangoJanuary 26, 2010 at 8:58 pm
One of the best prepaid cards I have seen is the new Mango card with no fees if you load $500 a month. With the coming changes in credit card law that will limit students who do not have a job, and with parents having to co-signature these cards, these types of cards are sure to become very popular with parents and students alike. They are also great for online shopping and work anywhere MasterCard is accepted.
BobJanuary 19, 2012 at 11:19 am
Lots of people go nuts trying to get credit. Whatever you do, just make sure you use a card as an effective financial tool that can help you instead of hinder you.
Please note that as of this date, the credit builder, iadvance or PRBC features of Account Now prepaid cards are no longer supported. Information on these features that we mention here are currently for historical and educational purposes only.
{ 11 comments… read them below or add one }
What I like about debit cards is that they allow you to make purchases in many places where regular credit cards are accepted but you have the advantage of not needing to borrow money or having to carry a balance like you would a regular old credit card. But remember that you would need to fund a prepaid card before you can use it since these cards don’t extend you a credit line. Loadable cards allow customers to spend cash with the convenience of plastic.
Absolutely. These cards let customers load and reload cash into an account that you can access easily. You can then make secure online purchases without accumulating debt. The best thing about these cards is the no interest feature because there are no revolving balances. Instead of utilizing a line of credit to make purchases, customers are using their own money. I also believe that debit cards are much safer than using cash because you are protected from unauthorized transactions and loss of funds due to theft or loss of the card under consumer protection regulations.
Note that ordinary debit cards are typically linked to your bank account and aren’t intended to help you build credit. On the other hand, prepaid cards are reloadable cards with their own accounts and may, in some cases, be used to help you establish credit.
On your last point on ordinary debit cards vs reloadable cards…
Help me get my mind around this. What, exactly, would get reported to the credit bureau? If you buy one of these at Wal-Mart, for example, the issuer wouldn’t even know who you are, correct? I could pay cash at Wal-Mart, go next door to Barnes and Noble, use the card to pay for my purchase, and walk out the door – completely off the grid.
Even if the issuer does have my indentifying information, what is there to report? There’s really no concept of a bill that is “due”, since it’s a pay up-front concept.
You’re not the first person to say that these cards can help build credit, so I’m wondering if I’m missing a key fact.
There are some prepaid cards that may also offer a “credit builder” feature. Take for instance the “Account Now” prepaid cards. Their application page also references a “free credit builder” feature and the possibility of applying for and receiving a line of credit. Check out the Account Now cards on the list above.
Ah.
PRBC is a bit different than the other credit bureaus. I was thinking that the prepaid card activity was somehow being sent to the 3 main bureaus, and I was struggling with that concept.
The line of credit is just a loan, of course, so it makes sense that this activity would be reported to all bureaus.
@Kosmo,
I guess with prepaid cards you are given a “test” of what happens with using a card. I look upon them as a transitional step to moving to regular credit cards. Interesting that there are credit bureaus beyond just the three main ones.
Prepaid Visa cards are great for online shopping safety as well. Obviously, I would say that the general consensus is that it’s now safe to use your cards on well known sites, like Amazon etc. But for those of us, like myself, who hate the idea of using a card associated with a bank account on any smaller, lesser known website, then using a prepaid card is a good backup plan. In the UK, the mobile phone provider, O2, has one and I know that Paypal has one too. If you can just apply the amount you are going to spend, you have less to worry about in terms of security online.
I know so many people who have had bank account problems relating to online fraud, that I will personally onlyuse a card associated with my bank account on few shopping sites – and always the bigger, well known ones.
I’ve seen so many pre-paid credit cards recently. At first I was wary because they only seemed to be offered by unknown companies, but now larger, well-known companies have started offering them so I’ve been wondering if they are a good idea.
One of the best prepaid cards I have seen is the new Mango card with no fees if you load $500 a month. With the coming changes in credit card law that will limit students who do not have a job, and with parents having to co-signature these cards, these types of cards are sure to become very popular with parents and students alike. They are also great for online shopping and work anywhere MasterCard is accepted.
Lots of people go nuts trying to get credit. Whatever you do, just make sure you use a card as an effective financial tool that can help you instead of hinder you.
Please note that as of this date, the credit builder, iadvance or PRBC features of Account Now prepaid cards are no longer supported. Information on these features that we mention here are currently for historical and educational purposes only.