It is very common for people to have prepaid credit cards today. Those that have one are unable to obtain a regular credit card because of their low credit score. Even though this type of plastic is easy to get, there are certain things you should know about them.

There are good and bad aspects to consider in prepaid credit cards. Let’s look at a couple of them:

Does it have a recognized mode of payment.

Most merchants accept regular credit and prepaid credit cards. But over the Internet, some merchants have different policies for prepaid cards. Check the policies first before using your card online. In most cases, you will be able to use your prepaid credit card with no problem at all.

Is it linked to a bank account? Many prepaid credit card issuers require you to have a checking or savings account. But re-loadable cards are also available. They are very popular since most people do not like to connect their bank accounts to their prepaid debit cards.

No credit check required.

Good credit is not required when obtaining a prepaid card. This is one way of helping people with bad credit. Even if you have bad credit, or no credit history at all, the no credit check policy qualifies most prepaid card applicants. Unfortunately, this type of card cannot help you rebuild your credit because they do not report account activities to any of the major credit bureaus.

These cards require you to add funds before they can be used. They can be reloaded by using your checking or savings account. Funds are transferred directly. You can also get funds from store locations but there is a nominal fee of up to $5 for this type of transaction.

Large user fees.

Some prepaid credit cards charge a large fee. There is also a monthly maintenance fee as high as $10 along with an activation and set up fee. The card only stay active if you pay the monthly and annual fees. There are also overdraft fees for those that exceed their balance. This is something that people do not know when they first get their prepaid credit cards.

Prepaid credit card rewards.

Similar to regular credit cards, many of the prepaid credit cards offer rewards. If you have the READYdebit Platinum Visa Prepaid Card, be prepared to pay a monthly fee of $14.95, which adds up to almost $180 per year. So before you sign up for a prepaid card with rewards, make sure you are willing to pay the extra fees.

Card protection options.

If you happen to lose your card, or if it is stolen, you will be issued a new card with the original balance. Not all prepaid card issuers do this though. You should also know that prepaid cardholders are not protected the same way as regular credit card users. This means you have to personally dispute fraudulent purchases if your card is stolen.

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