December 21, 2009
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Prepaid Credit Cards Get All The Credit, Pt.2
A good way to prove yourself.Prepaid credit cards do have some drawbacks. Most lenders have added new fees to capture lost revenue resulting from new credit card reform legislation that will soon become effective. New fees have also been imposed on prepaid cards including activation fees, monthly maintenance fees, declined transaction fees, Automatic Teller Machine (ATM) fees, balance inquiry fees, customer service, and inactivity fees. Activation fees run from $9.95 to $99.95 and monthly maintenance fees can run you from $2.95 to $9.95. Some prepaid credit card lenders will waive the monthly fee if you do a direct deposit. Withdrawals fees can also cost you from $1.50 to $2.50.
Although most prepaid credit card issuers do not charge for customer service calls, there are a few who do; the Millennium Advantage card chargers $1 per minute and the Espree card charges $3 per call. A few have a limited number of free calls before you begin incurring charges. Contrary to what most people think, some prepaid credit cards can affect your credit report. There are some lenders who report prepaid card activities to one or all three of the credit reporting bureaus. When obtaining a prepaid card, you should check with the lender as to whether or not they report. If they do, like traditional cards, you should stick to the rule of thumb that you shouldn't tie up more than 30 percent of the available balance.
If you are interested in paying for a recurring bill each month and would like it automatically deducted from your prepaid credit card, you may have some difficulty. Again you'll want to check with the merchant because many of them do not accept prepaid cards for this purpose. Nevertheless, if you are working on fixing a bad credit history, prepaid cards is a good way to prove you can manage finances. They also allow you to reserve hotel rooms and rental cars when needed. If you're interested in obtaining a prepaid card, take time to check out all your options. Nearly every lender offers a prepaid card product.