Overview of prepaid credit cards
The prepaid credit card is a prepaid, rechargeable, credit-based card. The principle is: first charge, then pay. It can then be used to pay or withdraw money like any other credit card, and sales are deducted from the credit account on the card. There is no credit line.
Prepaid cards are accepted like normal credit cards
They are characterized by the fact that they can be obtained without a credit check – that is, without a data query from Credit checker. This means: Even consumers with a negative Credit checker entry can apply for a prepaid credit card. Even minors can enjoy a prepaid card if the parents agree. Most providers offer the prepaid card from the age of twelve.
The prepaid cards are accepted in the same way as other credit cards, but only at credit card acceptance points that are connected online and thus also recognize credit cards without embossing. Most prepai cards are not embossed and are marked “Electronic use only”. However, cards with embossing are now also available – such as the Viabuy Prepaid Mastercard or the Payback Visa card.
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The prepaid card has proven to be extremely practical on holiday or when shopping online, whenever there is a risk of misuse or theft of the card. Restrictions can only apply to car rentals and hotel bookings. For car rental companies, because there is no credit limit and for hotel bookings, if the hotels still use so-called imprinters, for which the cards must be embossed.
You can choose between different options to top up the prepaid credit card: cash payment, transfer from any current account, credit card transfer or other transfer systems such as Paypal, Giropay, Skrill or cash ticket. Not every variant is free of charge. In any case, consumers should inform themselves in detail about the costs.
Credit cards with garnishment protection
For the holder of a prepaid card with financial problems, the attachment option of the prepaid credit on the credit card account can become a problem. Meanwhile, there are also offers for credit cards with garnishment protection. The account holder has a monthly allowance that cannot be attached, even in the case of ongoing attachments. However, the basic annual fee is usually somewhat higher than for cards without garnishment protection.
Virtual prepaid credit cards
Some prepaid credit cards only exist as virtual credit cards or the user can choose between a virtual variant or the plastic card. The virtual credit cards are usually cheaper than the plastic cards. In addition, there is no risk of theft. However, such credit cards can only be used for Internet purchases, cash withdrawals or payments in shops are not possible. Virtual credit cards are offered, for example, by Netbank or Wirecard Bank.
Prepaid cards and their costs
As with classic credit cards, there are costs for prepaid cards: annual price, costs for withdrawing money from ATMs and commission for use outside the USD countries. Fees for top-up the credit card, a one-time fee for activating or issuing the credit card are also possible. The positive thing is that some cards have interest on the credit. There are also considerable differences with prepaid cards.