When you use a prepaid credit card, you load money onto the card and then use it to make purchases at any retailer that accepts credit cards to make purchases. Prepaid cards operate in a similar way to debit cards, with the exception that the fees associated with using them are typically higher and more complicated. For those who do not have or are unable to obtain bank accounts, credit cards can be a useful tool for managing money and making purchases such as hotel and rental car reservations. However, you must use your card responsibly in order to avoid incurring costly fees.
Part 1 Using your Card for Goods, Services, and Cash
1. Before you use your card, make sure you know how much money is left on it. A prepaid credit card can only be used with money that has been loaded onto it. Before making any purchases, you should double-check your account balance because making a purchase with insufficient funds on your card can result in significant fees being charged to your account. This is especially important if you have not used your card in a long period of time, as many cards charge monthly maintenance fees ranging from $1 to $9.95, which will gradually deplete your available credit limit over time.
Many credit and debit cards charge a fee for checking your balance at ATMs that are not part of the card’s network, so be sure to use the correct ATM.
You’ll want to check your balance by phone (with an automated system rather than a live representative, as that will also incur a fee), by text message, through an app, or online if you’re using another financial institution’s ATMs.
2. Purchase goods and services in the same way that you would with a credit card. When it comes to shopping, a prepaid card functions in the same way as a credit card. You can use your card to make purchases in stores, shop online, and pay bills, as long as you do not spend more than the amount that has been loaded onto your card.
Prepaid cards have one significant advantage over traditional credit cards in that they are not linked to your personal information such as your Social Security Number. As a result, unlike with a traditional credit card, hackers cannot use them to steal your identity.
3. When you use your prepaid card to purchase gas, you must pay in the store. If you pay at the pump, most credit and debit cards will place a hold on your account for up to $100. This hold may not be released for several days, resulting in a temporary reduction in the amount of money you have available to spend on your credit card. If you prefer to pay the exact amount, you will need to enter the building and pay the attendant.
4. Make a cash withdrawal from an ATM. When it comes to withdrawing money, prepaid cards function in the same way as debit cards. The card issuer will send you a Personal Identification Number (PIN) for this purpose, which you will need to remember. If you do not have a PIN, you can obtain one by calling the number on the back of the card.
It is important to note that many credit cards will charge an additional fee of up to $2.50 on top of the fee charged by the bank from which you withdraw the money.
5. Checks are accepted as payment. Some credit cards will allow you to pay your creditors by issuing a paper or electronic check on your behalf on behalf of the cardholder.
Part 2 Making Reservations with a Prepaid Card
1. Before you use your card, make sure you know how much money is left on it. A prepaid credit card can only be used with money that has been loaded onto it. Before making any purchases, you should double-check your account balance because making a purchase with insufficient funds on your card can result in significant fees being charged to your account.
2. Renting a car with a prepaid card is an option. However, while using a regular credit card or debit card is preferable, there are companies such as Enterprise that accept prepaid credit cards for car rentals. Keep in mind, however, that unless you purchase insurance, you will typically have a more limited selection of cars to choose from, as agencies are reluctant to rent out more expensive models to people who do not have credit cards. Most companies will allow you to pay for your car with a prepaid card when you return it after checking it out with a regular credit card the first time. When renting with a prepaid card, you may need to complete a few additional steps. These are as follows:
Rent Early – If you can, rent early. Companies that allow you to reserve prepaid cars typically require you to make your reservation 4-6 weeks in advance. In most cases, you will not be able to rent a vehicle at the counter using a prepaid card.
Make Contact with the Local Office – Even companies that accept prepaid cards on a regular basis, such as Enterprise, require you to make contact with the local office in order to discuss the specifics of payment without a traditional credit card.
The security deposit, which may range from $100 to $500, will be collected in addition to the rental fee in order to cover any incidentals or additional costs that may arise during your rental period.
Before allowing you to pay with a prepaid card, some businesses will run a credit check on you to ensure that you are creditworthy. The purpose of the credit check is to assist them in determining the level of risk associated with renting to you – for example, if you consistently fail to pay your bills, they will be less likely to rent you a car.
Additional Information – For renters who pay with prepaid cards, the rental agency may require additional documentation, such as paycheck stubs, proof of insurance, current utility bills, and personal references.
Rentals that are one-way are typically not permitted when renting with a prepaid credit card. Exceptions may apply. The majority of companies will only accept a prepaid card if you can show proof of an onward flight from the same airport if you are renting at an airport.
3. Make a reservation at a hotel. You can pre-book a hotel room online with your pre-paid card at the majority of establishments. In addition, most hotels will require a deposit to cover the cost of your room as well as any additional fees that may be incurred. This deposit is typically made through the use of a pre-authorization on your bank account. Checking in with a prepaid card is permitted at some hotels. Others will require you to leave a deposit that is equal to several nights’ worth of hotel accommodations.. Your prepaid card can be used to make this deposit if you prefer.
4. Make arrangements to purchase airline tickets. It is possible to purchase airline tickets with your prepaid credit card in the same way that you would with a regular credit card. Because airline tickets do not include any incidental fees, such as those associated with hotels or rental cars, they do not necessitate the use of a credit card when purchasing them.
If you plan to use a prepaid card to purchase your ticket, many airlines will require that you do so at least 6 days before your departure.
5. Make a reservation for a cruise. Prepaid cards are accepted as payment for cruise tickets by the majority of major cruise lines. The majority of airlines operate on a cashless system, with all onboard purchases being charged to the boarding pass in which you are travelling. If you plan to pay for these purchases with a prepaid card, you will be required to make a deposit, which is typically around $500.
Your daily expenditures will be limited, typically ranging between $300 and $500 per day on a daily basis.
Upon disembarking from the ship at the end of the cruise, you will be required to settle any outstanding charges on your account.
Before making a reservation, be sure to check with the cruise line to find out what the rules are regarding onboard purchases.
Part 3 Reloading Your Card
1. Payroll deductions are made directly to your card. Prepaid cards are provided with account and routing numbers, allowing you to have your paycheck deposited directly into your card in the same way that you would with a traditional bank account. This is the quickest and most efficient method of adding money to your card. Direct deposits will appear on your card the same day they are made, and most prepaid cards do not charge a fee for receiving direct deposits. Some credit card companies even offer lower monthly fees and other benefits to cardholders who direct deposit an amount greater than a certain threshold each month.
2. Make a money transfer from your bank account. With a bank account, it’s usually possible to transfer money to your prepaid card through the internet, over the phone, or in person at the bank. Your bank may impose a fee for the transaction, but the prepaid card issuer is unlikely to impose one in most cases.
3. To add money to your card, you can do so through PayPal. It is usually free to load money onto most prepaid cards through PayPal, and the money will appear in your account within 2-3 business days.. Here’s how it’s done:
Sign up for a PayPal account. Enter your email address, home address, and phone number in the appropriate fields.
Set up your card as a bank account on PayPal by entering the account and routing number associated with your card in the appropriate fields.
To transfer money to your bank account, select “Transfer to your bank.”
4. Add money to your account at a retail establishment. Prepaid cards can be reloaded at a variety of locations, including gas stations, pharmacies, and grocery stores, as well as at the majority of check cashing and money transfer locations, including MoneyGram and Western Union agents. In the majority of cases, the cashier will be able to charge the money directly to your credit or debit card. Check with your credit card issuer for a list of locations where you can reload your card with a check or cash using a check or cash.
5. Make a purchase of a MoneyPak. Many prepaid cards allow you to purchase a MoneyPak from a retailer, which you can then use to load funds onto your card. It’s a card with cash value on it as well as a code number that you can use to transfer the value to a prepaid card of your choice. In most cases, the amount you pay for the MoneyPak will be the amount that is credited to your account, though there may be fees associated with the transaction. To load money onto your prepaid card account after purchasing the MoneyPak, log into your account online or by phone and enter the MoneyPak code to load money onto your card.
6. Reload your account at an ATM. Prepaid cards issued by banks will frequently allow you to load money onto the cards at bank ATMs, though some will only allow you to load money onto the cards at specific ATM locations.
With cards issued by credit card companies such as Visa or American Express, or by major retailers such as Walmart, reloading at ATMs is typically not possible.
Examine the terms of a card before you purchase it to determine whether or not it is possible to reload it at ATMs.
Part 4 Avoiding Excessive Fees
1. Understand the fee structure associated with your card. It’s critical to understand the fees associated with your credit card in order to use it in a way that keeps costs as low as possible. If you don’t, you could end up paying tens, or even hundreds, of dollars in fees each month. Please contact your card issuer for a complete list of fees associated with your card. You can find a breakdown of fees associated with some of the most popular cards here.
2. Check to see if your card is pay-as-you-go or if there is a monthly fee associated with it. If your credit card charges you per transaction, you’ll want to save it for emergency situations only. Most credit cards, on the other hand, charge a monthly fee. See if you can avoid this fee in one of the following ways by checking with your card issuer.
By making a certain number of purchases a month.
By using direct deposit to add money to your account.
By loading a certain amount of money each month.
3. If your card issuer charges you for adding money to your card, you should reload as little as possible. You should try to load large amounts of money onto your card at irregular intervals if this is the case with your card in order to keep fees to a bare minimum. Keep in mind, however, that some cards have limits on the amount of money that can be added at one time. Make an effort to avoid cards that charge a fee for adding money as well as cards with low maximum money-add limits.
4. Make certain that you only withdraw money from network ATMs or that you only use the cash back feature in stores. Check out this page to see the fees that the most popular credit and debit cards charge for ATM withdrawals. It is usually necessary to use an ATM within the issuer’s network in order to avoid them. Consult with your card issuer to find out which ATMs are free.
Refund in cash – When making a purchase at many retailers – particularly gas stations, pharmacies, and supermarkets – you have the option of asking for your money back. This cash will be included in the purchase price and will not incur any additional fees as a result.
5. Report a lost card as soon as possible. The amount on your card is protected up to a maximum of $250,000. If you notify your card issuer as soon as possible, they will almost always restore your original balance and issue a replacement card. The sooner you act, the less trouble you will have, because whoever has obtained control of your card will have less time to rack up charges.
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