The prepaid cards were a last option for you if you needed a credit card but had bad credit that disqualified you application to major lending banks.
The economic crisis was a crisis for credit lenders as well as for consumers. Large banks were bailed out with federal funds but they watch their credit business decline.
Cash strapped consumers defaulted in large numbers on credit card debt. Massive numbers of bankruptcies wiped out millions of dollars of credit debt as well.
For struggling consumers, the choice to default on credit debt was due to lost wages and to the need to prioritize expenses. When faced with a much lower income a reasonable person will pay the most necessary expenses first.
If you were able to pay your bills and your credit card debt, you may have been one of hundreds of thousands of people who began to rapidly pay down credit debt to avoid potential problems in the future.
The result of the defaults and of those who paid off credit debt and stopped using their credit cards daily was a decrease in profit for credit lenders.
Sub-Prime Offers
Lenders turned to sub-prime credit offers. As nationally recognized banks began to offer both unsecured and secured credit cards to applicants with bad credit, Visa and MasterCard began to offer their transaction services for those accounts.
One of the fastest growing areas of credit has been the prepaid credit card. Once the black sheep of credit cards, prepaid credit is now accepted by the public. As the acceptance grew, Visa and MasterCard moved into that area of finance.
The problem with prepaid cards in the past was the limited use as many merchants did not accept the cards.
By adding the Visa or MasterCard logo, banks have now created prepaid credit accounts with cards that can be used in the same way as a standard credit card account.
Top 3 Visa Prepaid Cards
Visa offers a wide range of prepaid options. Some are meant to be used as a credit card while others offer gift and money management capability.
Visa Prepaid Debit – Convenient and safer to use than cash. No credit check required and the spending limit is equal to the amount of cash you use to fund the card.
You have the protection from unauthorized charges offered by Visa and protection if your card is lost or stolen.
Visa Buxx Prepaid Card for Teens – The new addition to the Visa prepaid lineup is an excellent way for parents to teach financial responsibility to their children.
The card can be used anywhere Visa is accepted. Funds can be added by phone and parents can monitor their child’s spending online. This card is very popular for parents of students heading off to college.
Visa TravelMoney – This Visa prepaid card is brilliant as it replaces traveler’s checks that must be sign and re-signed and kept safe. You can use the card just as any Visa credit card and fund it in advance to use during your travels.
The easy way to obtain a Visa prepaid card is to buy a card at one of the many banks or retails merchants that have the prepaid cards for sale.
Costs associated with using a Visa prepaid card are usually $10 or less for the initial purchase and $3-6 to add funds to the card. There are also monthly management fees (usually $5-8 per month) and ATM fees should you withdraw cash from the Visa debit card.
Each time you add funds to your Visa prepaid card you will pay a small feel of $4-6. Thus, if you add $200 every week you will be charged from $16-24 a month. If you plan well and deposit $800 one time during the month your fees will be only $4-6.
Top 3 MasterCard Prepaid Cards
While Visa offers multiple prepaid cards, MasterCard has 3 options designed for everyday use, for gifts and for travel.
MasterCard Everyday Prepaid Card – Easy to obtain as no credit check or approval is required. Safer to use than carrying cash when shopping and the online financial tools make it easy to pay bills and to manage your budget.
MasterCard Prepaid Gift Card – Gift cards have been popular for years but were mainly available through major retail chains. The MasterCard prepaid gift card is a better option as it allows the recipient to buy what he wants where he chooses.
MasterCard Travel Card – Leave the cash at home and don’t worry about Traveler’s Checks. Fund your MasterCard Travel card before you leave home and use it worldwide for all your travel expenses.
The prepaid credit cards by Visa and MasterCard offer a variety of logos for your card and a variety of choices of spending limits. Some cards can be funded up to $2500 while other options allow you to add $10,000 to the prepaid account.
The fees to use a MasterCard prepaid card can vary widely depending on the type of card you obtain. The fee to activate a new card ranges from $9.95 to as high as $39.95 depending on the offer.
There is a maintenance fee of $4.95-$6.95 per month and a few cards list the maintenance fee as an annual fee rather than a monthly charge. ATM fees are similar to those charged by banks and taking cash from your prepaid card will carry a fee of $2.00-$2.50 per transaction.
Cash withdrawal should be avoided when possible as you are paying a small fee to fund your card and then a fee to withdraw the same money. Cash withdrawals from Mastercard prepaid cards add unnecessary charges.
Summary
When you choose one of the top three prepaid options, you will be pleasantly surprised to find the terms and conditions are listed in a few short paragraphs.
Because you are funding your Visa or MasterCard account in advance, there are no late fees, over limit fees, or interest fees to worry about.
Depending on the account you choose, there may be ATM fees, funding fees, etc but these are minimal when compared to the charges associated with a standard credit card account.
When you use a prepaid card, it’s wise to plan for the fees you will pay. Re-loading your account with one large amount will save month as you will have only one fee to pay.
The more transactions you make putting money into your account or taking cash out – the higher the fees will be on the account.
