You can open a prepaid credit card by depositing money into its account, which means it is similar to making a deposit to open a regular bank account. Once the money is deposited, you are issued a prepaid credit card that can be used anywhere credit cards are accepted. Because it works similarly to a debit card, you will never go into debt using your prepaid credit card. The other difference between prepaid and regular credit cards is that prepaid cards do not have bills, interest charges, or late fees attached to them, which often saves you money in the long run.
However, all prepaid credit cards have some type of fee, whether it be a:
start-up fee of $5 to $15
small weekly maintenance fee
monthly maintenance fee
Another small downside to prepaid credit cards is that you may not be able to charge monthly payments to them, because some businesses are wary of working with prepaid credit cards. If, for example, you wanted to pay for an expensive piece of furniture over several months through automatic deductions to your prepaid card, the furniture company may not allow this.
Finally, it is important that you make sure you know your card balance before making a purchase. If you lack the funds to pay for something, your charge will often be denied. However, because the card balance is available online, keeping track of your balance takes only a few clicks of the mouse.
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