What to Watch Out for in Pre-Paid Credit Cards

Pre-paid credit cards can be an excellent option for individuals looking to build a credit history or to repair a credit history that has been damaged. Nonetheless, there are several things one should watch out for when shopping for the perfect card.

One of the most important considerations is the annual fee. Most pre-paid credit cards have annual fees that are quite expensive when compared to other credit cards in the industry. In addition, some have membership fees or initial enrollment fees that can really add up.

Pre-paid credit cards also must have funds “loaded” on them before they can be used for making purchases. There are also fees associated with this transaction. This may only be a few dollars or it may be several dollars. In addition, different methods of payment have different costs. Having money automatically placed on the card from your paycheck, for example, is usually less costly than sending a personal check. Be sure to learn about these costs before selecting a credit card. Otherwise, you may find yourself paying well over $100 per year in these fees alone.

Although prepaid credit cards are quite convenient and can help build a solid credit history, there are dozens to select from. Therefore, it is best to shop around to find one that best fits one’s lifestyle and has the least number of fees.

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