The prepaid card option can feel like a dream come true, especially if you want a card that has no ties to a bank and doesn’t need a credit score. However, without doing the proper amount of research, you may fall victim to issues that you likely won’t even realize until it’s too late. So before you go ahead and apply for a prepaid card, take a look at these important considerations first:
They Can Be Expensive
Unfortunately, prepaid cards are full of hidden charges. These are things that you might be aware of before you buy the card, but many cards are only going to mention this in the small print or after you’ve signed up. This is why it’s important to be careful about what you agree to. Here are some of the charges you can expect to see:
- A fee for buying the card
- Monthly or annual fees for using the card
- Fees for putting money onto the card
- Fees for paying with the card
- Cash withdrawal fees
- Charges for not using the card
- A charge for closing your account
There are Some Transactions They Won’t Work For
There are also quite a few establishments where prepaid cards simply won’t work and you will either be notified of this at the time or days later when the payment bounces. This often happens with purchases where the final price is not necessarily known up front, like hotel rooms or pay at pump fuel.
If you use your prepaid card for transactions like these, they may end up holding the amount on your card for thirty days, thus freezing the funds and leaving you with a lot less for the next month. The company could even do a chargeback if the amount declines, and then come after you for the amount, and insisting that it’s paid by other means.
There is less Purchase Protection
There is absolutely no purchase protection with most prepaid cards, and those that have it offer very little. With most banks, if something happens and they have to go out of business, you will be able to recover the majority of your money. However, if this happens with your prepaid card company, you get nothing. All of your money is lost.
Losing Your Card Can Cause Trouble
If you lose your card, most prepaid companies do not have the same protection as standard banks. This means that the remaining balance is very easy to spend, and the thief doing so will probably not get caught. Even worse is the fact that you will probably never see that money again, even after you have reported it as lost or stolen.
Above are just a few of the things to take into consideration before buying a prepaid card. They might seem tempting, but they can really impact your life quite negatively. You may be thinking that there are no other options for you, but you would be very wrong indeed.
There are loads of banks out there that are able to provide you with normal and free accounts without you needing a credit score to get started. It really can be that simple!
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