If you want the convenience of a credit card but can’t qualify due to poor credit, this card is a good choice.
A prepaid card may be the credit card of last resort for consumers with serious credit problems. It can also be a useful card to use for online or special purchases or to help with your budget efforts.
The credit card is used in the same way as a bank debit card. Unlike debit cards, a prepaid credit card has several fees associated with its use.
It’s designed for those who prefer using a plastic card to carrying cash on their person. It’s especially useful if you need a card to use for a specific purpose such as renting a car, buying airline tickets or making purchases online.
Fees
There is an enrollment fee (currently $9.95) which is non-refundable and is paid when you first load funds to the credit account. In addition, there is a $4.95 monthly maintenance fee. Fees for the card will total almost $70 for the first year and about $60 each successive year.
However, the fees can be greatly reduced by using direct deposit to fund the card as the monthly fee will be waived for each month following a direct deposit.
As indicated by the name, the prepaid MasterCard from Western Union requires payment in advance of purchases. The purchases you make are not charged to a growing debt as with a regular credit card but are subtracted from the prepaid funds in the account.
Advantages
There is no interest rate charged as you are only using money you have set aside for that prepaid account. You cannot overspend to any great extent as you are limited to the amount you have prepaid to the card. You can load funds directly through Western Union for a fee of $3.95 per transaction.
This makes the idea for a student visiting another country as funds could be wired through Western Union without the necessity of receiving large amount of cash. Unlike many banks offering prepaid credit cards, Western Union does not require you to have a bank account to qualify.
Most prepaid cards are quite expensive with application fees, processing fees and other amounts that can quickly place more than $100 on a new account the moment it’s opened.
The monthly fees of $4-9 commonly charged may seem negligible when compared to finance fees on standard credit accounts. However, you are paying in advance for use of a prepaid credit card.
The prepaid card by Western Union is less expensive than many other options available when you consider the only fee for a new account is a one-time non-refundable fee of $9.95 and the monthly charge is at the lower end of fees charge by competing banks.
This prepaid card may also be used as a great budgeting tool if you direct deposit monthly the amount of money you plan to spend on variable expenses such as food, gifts, entertainment, etc.
These variable expenses can be difficult to keep within a budget but by providing only the budgeted amount on the card each month, you can more easily control your tendency to overspend.
Disadvantages
If you are applying for prepaid credit cards you may hope to improve your credit rating by using a prepaid account.
If so, this is not the card for you to use. Prepaid accounts from Western Union are not reported to credit rating bureaus.
If you need a plastic card for a specific purchase, this is a good option. When you apply there is no request for information sent to the credit rating agencies and therefore no mention of this prepaid card in your credit file.
You are limited to adding no more than $2500 in fund to the card with one transaction. At no times can you have more than $9500 funded on the card. The prepaid card is a convenience item that will neither help nor harm your credit rating.
Summary
If you are looking for a tool to help with budgeting or need a credit card for special uses but cannot qualify due to poor credit, choose the Mastercard from Western Union!
The fees required are far less than those charges for similar prepaid credit accounts. However, if you are attempting to improve your credit score, you should choose a prepaid credit card by a lender that does report regularly to the credit bureaus.
