A:

It is difficult to rent automobiles using prepaid credit cards with many major American car rental companies. There are some that allow their use, but many do not. For plans that include car rentals, it is advisable to use a bank-issued credit card, preferably one bearing the Visa, MasterCard or American Express logo. If you can rent a car using a prepaid credit card, accept the insurance offered by the car rental company (unless other insurance is present), because almost no prepaid cards offer insurance on car rentals.

Almost all other transactions can be completed with a prepaid credit card as they would with any other card. Both online purchases and hotel bookings can be made with these cards. In many instances, those accepting payment may be unaware that a card is prepaid.

Prepaid credit cards have annual or monthly fees that range from $12 per year with the American Express Self Serve to well over $300 with the NetSpend Prepaid (Pay As You Go) and mPower Visa Prepaid Card. It is easy to minimize costs if you do your research before selecting a card. Some cards may offer benefits that make high fees worthwhile.

Prepaid credit cards can usually be reloaded at storefront locations or online. These transactions may carry fees, depending on the card you are using. Some prepaid credit cards allow you to make ATM transactions to withdraw money, though there is often a fee involved.

When you use prepaid credit cards to purchase goods online or in a foreign country, a currency exchange may be necessary. The amount charged for these exchanges varies and can add significantly to the cost of using the card.

Most prepaid credit card companies offer protection in the event of loss or theft of a card. However, this protection is not mandated by any federal or state legislation. Companies do this to attract and retain customers, and they have the ability and right to make changes to guarantees of reimbursement in the event of loss at any time. Deposits tied to prepaid credit cards are not expressly protected by the Federal Deposit Insurance Corporation (FDIC), even if the cards are issued by banks that also offer other accounts that are protected.

Prepaid credit cards are a good alternative if you need to make transactions using credit cards on the Internet or on the telephone (other than renting cars) and if you do not have access to traditional credit cards. They can be very expensive, but if you do your research, you can find prepaid cards that offer you a good value for the function that they serve.

RELATED FAQS
  1. Why should I register a prepaid credit card?

    Explore reasons why registering a prepaid credit card is a good idea. Learn about protection if the card is lost or stolen ... Read Answer >>
  2. Can I use a prepaid credit card to pay bills or to transfer money to other accounts?

    Learn how prepaid credit cards enable convenient bill payments and transfers. Explore different fees charged for such transactions. Read Answer >>
  3. What is the difference between a prepaid credit card and a gift card?

    Although prepaid and gift cards are used in the same manner, a prepaid credit card can be used repeatedly, while a gift card ... Read Answer >>
  4. How do I check the balance on my prepaid credit card?

    Check your prepaid credit card balance quickly using your phone or the Internet. Keeping track of your balance is easy and ... Read Answer >>
Related Articles
  1. Personal Finance

    How To Find The Right Prepaid Debit Card

    Prepaid debit cards are becoming increasingly popular. Here are some tips for choosing the right prepaid debit card.
  2. Personal Finance

    8 Ways To Avoid Getting Burned By Prepaid Debit Cards

    These cards have many differences from traditional debit and credit cards that can cost you money if you don't know what to watch out for.
  3. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  4. Personal Finance

    10 Considerations For Using Your Credit Card Abroad

    Credit cards can be the best item you pack when traveling, just make sure that you are taking the right card that suits your needs.
  5. Personal Finance

    Credit vs. Debit Cards: Which Is Better?

    Be strategic about the card you choose! Learn more about which is better for you: credit cards or debit cards.
  6. Personal Finance

    How Many Credit Cards Should You Have?

    Having several credit cards provides many benefits. Here are a few factors to consider when you’re deciding how many credit cards you need.
  7. Personal Finance

    The Dangers of Getting a Paycheck on a Prepaid Debit Card

    Receiving your paycheck on a prepaid debit card may seem like a boon until you discover all the fees that can come with it.
  8. Personal Finance

    Univision MasterCard Prepaid Card: What You Need to Know (MGI, WU)

    The Univision MasterCard prepaid card markets itself as a safe alternative to cash, but competing cards may offer better value for consumers.
  9. Personal Finance

    Terrible Credit Score? Try These Credit Cards

    When your credit is less than stellar you have fewer choices. But some are still better than others. Here's our read on which cards to get.
RELATED TERMS
  1. American Express Card

    A credit, charge or prepaid card branded by American Express, ...
  2. Cash Card

    A cash card can be any card that you can insert into an ATM or ...
  3. Carding

    Carding is a form of fraud that uses stolen credit card information ...
  4. Secured Credit Card

    A type of credit card that is backed by a savings account used ...
  5. Payroll Card

    A prepaid card onto which an employer loads an employee’s wages ...
  6. Prepaid Insurance

    Payments that are made in advance for insurance services or coverage. ...
Trading Center