Are Reloadable Credit Cards a Good Idea?

A reloadable credit card can be an alternative to a checking account.

A reloadable credit card can be an alternative to a checking account.

A reloadable credit card can be an alternative to a checking account. You can have your wages loaded onto a prepaid card and use it in much the same way you would a regular debit or credit card. The major difference is that when all of your money is gone, you won't be able to use your card to make purchases. Make sure you understand the fees you'll be charged before signing up.

No Credit Check

As the bank that issues your prepaid credit card won't be lending you any money, there'll be no need for a credit check when you apply. This means you'll be able to get your hands on a reloadable card even if you've had problems with debt in the past. It also makes prepaid cards a good option for young people who haven't had the chance to establish a payment history.


Wages and benefits can be loaded straight onto a prepaid card. All you'll need to do is provide your card account details to a payer. You'll also usually be able to load cash onto your card online, over the phone, or at payment points in banks or retail outlets.


Because you won't have access to a credit facility on your prepaid card, you won't be able get into debt or rack up any late payment or over-limit charges. Once you've spent all of the money on your card, it won't work. This could help you budget if you regularly go into the red on your checking account. You'll need to keep a close eye on your balance each month.


Prepaid card providers charge a number of fees. Some charge an application fee when you sign up for your card. Others will issue cards for free and either charge you for membership or take a commission when you load money to your account. You could also be charged for using an ATM. Some issuers will even charge you an inactivity fee if you don't use your card. You can avoid fees with some cards if you pay in a specified amount each month and stick to using your card company's ATM network.

No Checks

You won't be able to write checks from your prepaid account. The fact that consumers are increasingly carrying out financial transactions digitally should make this less of problem as time goes by.


Take out a card that offers Federal Deposit Insurance Corporation protection. This would mean your funds would be insured up to the federal limit if the bank that issued your card failed. Not all prepaid cards offer FDIC protection.


About the Author

Michael Roennevig has been a journalist since 2003. He has written on politics, the arts, travel and society for publications such as "The Big Issue" and "Which?" Roennevig holds a Bachelor of Arts in journalism from the Surrey Institute and a postgraduate diploma from the National Council for the Training of Journalists at City College, Brighton.

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