Prepaid credit cards are flying of the shelves faster than just about anything else. People are buying them for any number of reasons from an attempt to control spending to the desire to have a credit card in their wallet. Here are five things that you should know while deciding if a prepaid credit card is right for you.
- The fees are outrageous. They include activation fees, ATM fees, fees each time you use your PIN for a purchase, and monthly maintenance fees among others. You can easily spend $50 a month in fees.
- These cards do not improve your credit score and do not appear on your credit report.
- A debit card attached to a checking account is a better deal for everyone.
- Not all prepaid credit card companies have FDIC coverage on the accounts, so you could lose all of your money if the institution fails.
- Several of the issuers of prepaid credit cards are being investigated for their practices. First Data Corp, Green Dot Corp, Account Now, NetSpend, and UniRush Financial Services are all being scrutinized.
Prepaid credit cards may be a boon if you can not possible get a traditional bank account. Even if you are forced to use one, shop around. With a little research you can avoid the cards with the highest fee, and make sure you’re not racking up so much debt you’ll be looking for a FL credit counseling agency before you know it!