4 How To Use A Prepaid Credit Card (With 21 Steps)

doylc.com - How To Use A Prepaid Credit Card - With a prepaid credit card, you deposit money onto the card and use it to buy goods or services from any merchant that accepts credit cards. Prepaid cards work similarly to debit cards, except the fees for using them are usually higher and more complex. For those who don't have or can't acquire bank accounts, they can be a way to manage money and do things like hotel and car rental reservations, but you need to use your card wisely to avoid costly fees.

Using your card for goods, services and cash

1. Check your balance before using your card. A prepaid credit card must be loaded with money. Before you buy anything, be sure you know your balance as you can be hit with high fees if you make a purchase without having enough funds on your card. This is especially important if you haven't used your card for a long time, as many cards have monthly maintenance fees ranging from $1 to $9.95 that will slowly drain your balance.

Many cards charge a fee for checking your balance at off-network ATMs, so make sure you're using the right ATM.

Others charge a fee at all ATMs, so you should check your balance by phone (using an automated system, not through an on-site agent, as this also incurs a fee), text message, app, or online.

2. Buy goods and services like you would with a credit card. When shopping, a prepaid card works like a credit card. You can shop in stores, shop online, or pay bills as long as you don't exceed the amount loaded on your card.

Prepaid cards have a major advantage as they are not linked to your private information like your social security number, so hackers cannot use them to steal your identity, unlike a regular credit card.

3. Pay with your prepaid card when you fill up in the shop. Paying at the pump will put your card on hold for up to $100 on most cards. This block may not be lifted for several days, temporarily reducing the amount you can spend on your card. To pay the exact amount instead, you have to go inside to pay the warden.

4. Withdraw money from an ATM. Prepaid cards work the same way as debit cards to withdraw money. For this purpose, you will receive a personal identification number (PIN) from the card issuer. If you don't have a PIN, you can call the number on the card to request one.

Note that many cards charge a fee of up to $2.50 in addition to the fee charged by the bank where you withdraw the money.

5. Pay with checks. Some cards allow you to pay your creditors by writing a paper or electronic check to you.

Reservations with a prepaid card

1. Check your balance before using your card. A prepaid credit card must be loaded with money. Before you buy anything, be sure you know your balance as you can be hit with high fees if you make a purchase without having enough funds on your card.

2. Rent a car with a prepaid card. While it's easier to rent with a regular credit or debit card, there are companies like Enterprise that accept prepaid credit cards when renting cars. Note, however, that unless you buy insurance, you usually have a more limited choice of cars, as agencies are reluctant to rent out more expensive models to those without a credit card. Most companies allow you to pay for your car with a prepaid card when you return it, after first checking it out with a regular credit card. There are a few additional steps you may need to take to rent with a prepaid card:

Rent early – Companies that allow prepaid cars often require you to reserve 4-6 weeks in advance. In most cases, you cannot borrow at the counter with a prepaid card.

Contact the local office – Even companies that often accept prepaid cards, like Enterprise, require that you contact the local office to discuss the details of paying without a standard credit card.

Security Deposit – In addition to the rental cost, you can expect a security deposit of between $100 and $500 to cover any incidental charges or additional costs.

Credit Check - Some companies require a credit check before you can pay with a prepaid card. The credit check is designed to help them assess the risk of renting you - ie if you regularly fail to pay bills they are less likely to rent you a car.

Additional Information - The rental agency may request additional documentation for renters using prepaid cards, including payslips, proof of insurance, recent utility bills, and personal references.

No One-Way Rentals – One-way rentals are not normally allowed when renting with a prepaid card. If you rent at an airport, most companies will only accept a prepaid card if you can show proof of a return flight from the same airport.

3. Check into a hotel. Most hotels allow you to pre-book a hotel room online using your prepaid card. Most hotels also require a deposit to cover the cost of your room and any extra charges. This deposit is usually made as a pre-authorization on your credit card. Some hotels allow prepaid cards for check-in. For others, you must leave a deposit equivalent to multiple nights' accommodation at the hotel. This deposit can be charged to your prepaid card.

4. Buy plane tickets. You can use your prepaid credit card to buy airline tickets just like you would with a regular credit card. Unlike hotels or rental cars, there are no additional costs for airline tickets, so no line of credit is required when purchasing.

Many airlines require you to purchase your ticket at least 6 days before departure if you are using a prepaid card.

5. Reserve a seat on a cruise. Most major cruise lines accept prepaid cards as a method of payment for the cruise ticket. On board, most lines use a cashless system where all onboard purchases are charged to your boarding pass. When using a prepaid card to charge for these purchases:

You must pay a deposit, usually around $500.

Your daily expenses are limited, typically between $300 and $500 per day.

You must settle any outstanding charges in your account before disembarking at the end of the cruise.

Before booking, be sure to check with the cruise line for rules on onboard purchases.

Top up your card

1. Deposit your paycheck directly into your card. Prepaid cards come with account and routing numbers so you can have your paycheck deposited straight to your card just like you would with a bank account. This is the most effective way to deposit funds into your card. Funds show up on your card the same day, and most prepaid cards don't charge a fee for direct deposits. Some even offer lower monthly fees and other benefits for cardholders who deposit directly over a certain amount each month.

2. Transfer money from your bank account. If you have a bank account, you can usually transfer money to your prepaid card online, over the phone, or in person at the bank. Your bank may charge you for the transaction, but the prepaid card issuer generally does not.

3. Use PayPal to add money to your card. With most prepaid cards, loading money through PayPal is free and the money will appear in your account within 2-3 business days. Here's how:

Sign up for PayPal. You must enter your email address, home address and phone number.

Use the account and routing number associated with your card to set it up as a bank account with PayPal.

Click "Transfer to your bank" to transfer money to your card.

4. Add money at a retail store. Prepaid cards can be recharged at many gas stations, pharmacies, grocery stores, and most check handlers, MoneyGram and Western Union agencies. In most cases, the cashier can load the money directly onto your card. Check with your card issuer for a list of locations where you can load your card with a check or cash.

5. Buy a MoneyPak. Many prepaid cards allow you to purchase a MoneyPak from retailers, which you can use to add funds to your card. The MoneyPak is a card with a cash value and a code number that you use to transfer that value to your prepaid card. In general, what you pay for the MoneyPak is what is credited to your account, although sometimes there are fees. After purchasing the MoneyPak, access your prepaid card account online or over the phone and use the MoneyPak code to add the money to your card.

6. Top up at the ATM. Bank-issued prepaid cards often let you load money onto the cards at bank ATMs, although some only allow it at certain ATMs.

Topping up at ATMs is generally not possible with cards from credit card companies such as Visa or American Express, or from major retailers such as Walmart.

Before buying, check the conditions of a card to see if it can be topped up at ATMs.

Avoid excessive fees

1. Find out about the fee structure of your card. It is important to know what fees are associated with your card in order to use it cost-effectively. If you don't, you can end up paying tens or even hundreds of dollars a month in fees. Here's a breakdown of fees for some of the most common cards, but contact your issuer for a detailed list.

2. Check if your card is pay-as-you-go or has a monthly fee. If your card is charged per transaction, you should only use it in emergencies. Most cards charge a monthly fee instead. Check with your issuer to see if you can avoid this fee in one of the following ways:

Through a certain number of purchases per month.

By using direct deposits to fund your account.

By loading a certain amount of money every month.

3. Top up as infrequently as possible if your issuer charges for adding money to your card. If this is the case with your card, try loading large amounts at irregular intervals to keep fees down. Note, however, that some cards have a limit on how much you can add at once. Try to avoid cards that both charge for adding money and have low limits for adding money.

4. Make sure you only withdraw money from network ATMs or use the cash back feature in stores. Check out the fees charged by the most popular cards for ATM withdrawals here. To avoid them, you usually have to use an ATM within the issuer's network. Check with your issuer which ATMs are free.

Cashback – Many retailers – especially petrol stations, pharmacies and supermarkets – allow you to request cashback when you make a purchase. This cash is included in the purchase price and is therefore free of charge.

5. Report a lost card immediately. The amount on your card is insured up to $250,000. If you notify your issuer immediately, they will usually restore your original balance and issue a new card. The quicker you act, the less hassle you'll have because whoever has your card now will have less time to collect fees.