Buy a Prepaid Credit Card With a Credit Card

Prepaid credit cards can be a useful way to control your finances if you don’t have a bank account, to gift money, or to teach your kid financial discipline. You can use a credit card to purchase a prepaid card in a retail store, a financial services center, or online, but for the best value, you’ll need to do some careful research beforehand to avoid cards with high fees.

Steps

Buying a Prepaid Credit Card

  1. Buy a card in a retail store. Most gas stations, drug stores, grocery stores, and big box stores sell prepaid credit cards. Though it is up to individual stores whether they accept credit cards for such purchases, the vast majority of them do. Generally, the amount on the card will be the amount you paid. However, because selection in stores is limited and buying there often costs more, it is generally a better idea to shop online.
  2. Purchase a card at a financial services center or currency exchange. You can find prepaid cards at many banks, credit unions, check cashing stores, and currency exchanges. As with retail stores, some location might not accept credit cards as a form of payment, though this is rare. As in the case of the Green Dot prepaid Visa, the fees associated with these cards are often less than if you purchased the same card in a retail store.[1] Because the fees vary dramatically from card to card, it is best to compare cards online before purchasing.
  3. Get a card online. There are dozens of cards available online, all of which can be purchased easily with a credit card. Usually, you will find better deals here; for instance, activation or initial purchase fees are often waived. For the best card, be sure to comparison shop.
  4. Keep the receipt. Always keep the receipt in case you or the person you give the card to has difficulties using it.

Finding the Best Card

  1. Avoid costly fees. Prepaid credit cards are not regulated like debit cards or normal credit cards, and as a result they come with a dizzying variety of fees. You can check here for some of the fees on the most popular cards. Before buying a card, however, be sure to read the fine print and check for:
    • Activation or initiation fees
    • Monthly fees
    • Per transaction fees
    • ATM fees
    • Balance inquiry fees
    • Fees to add money to the card
    • Fees for paper statements
    • Fees for customer service calls
    • Bill payment fees
    • Fees for not using your card
    • Fees when closing the account
    • Overdraft fees
  2. Stay away from cards that charge per transaction. If you are going to use your card regularly, pay-as-you go cards will cost you a lot of money. A low monthly maintenance fee is a better option, unless you are only using your card in emergencies. In that case, also make sure your card does not have an inactivity fee.[2]
  3. Watch out for cards that charge per deposit and have deposit limits. Most cards will waive deposit charges if you use direct deposit, PayPal, or a bank transfer to fund your card. Adding money at a retail store usually entails a charge ranging from $2 to $6. Some, however, charge for all deposits. For these cards, you’ll want to add funds infrequently in large amounts, so make sure they don’t have limits on how much you can add at one time or in a given month.
  4. Use a card comparison site. Sites like BankRate.com and Consumer Reports offer comparisons and recommendations to help you select cards with the fewest fees. Some of the most highly recommended cards include:[3]
    • Bluebird – An American Express branded card that includes bill pay (can send paper or electronic checks from the account), no monthly fee, no activity fee, no fees for customer service, no inactivity fee, and no declined transaction fee.[4]
    • Chase Liquid – A Visa branded card that has a $4.95 per month maintenance fee (waived if card is linked to a Chase bank account), but offers overdraft protection and no other fees, so long as you use in-network ATMs for withdrawals and account inquiries. It does not have bill pay.[5]
    • Visa Rush Card Unlimited Plan – Has a one-time activation fee and a monthly fee of $5.95 (if you use direct deposit) or $7.95 (if you don’t), but has no other fees, so long as you reload via PayPal or direct deposit and use in-network ATMs for withdrawals and balance inquiries.[6]
    • Green Dot Prepaid Visa – Card with a $5.95 monthly fee (waived if you deposit a certain amount each month or have a certain number of transactions) but no other fees so long as you buy the card online and use in-network ATMs for withdrawals and balance inquiries.[7]

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Sources and Citations

  1. ↑ https://www.greendot.com/greendot/cardholder-agreement?from=landingpage
  2. ↑ http://www.creditcards.com/credit-card-news/help/9-things-you-need-to-know-about-prepaid-cards-6000.php
  3. ↑ http://www.consumerreports.org/cro/prepaid-cards/buying-guide.htm
  4. ↑ http://www.bankrate.com/finance/banking/bluebird-by-american-express-walmart.aspx
  5. ↑ http://www.bankrate.com/finance/banking/chase-liquid.aspx
  6. ↑ https://www.rushcard.com/Fee-Chart
  7. ↑ https://www.greendot.com/greendot/about-the-cards#simple_fee
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