Holiday shoppers choosing prepaid cards as gifts…
With an expected $25 billion being spent on gift cards this holiday season, according to an Archstone Consulting survey, the new trend will be for consumers to purchase prepaid bank cards instead of company branded gift cards. Prepaid bank cards work just like gift cards but with more flexibility in that they can be used anywhere credit cards are accepted. Recipients can choose to spend their prepaid gift card on items wherever they choose or on daily living expenses, if need be, making a prepaid gift as useful as cold hard cash. Prepaid cards also give recipients the option to search for lower prices or purchase online.
The Better Business Bureau encourages consumers to read the find print thoroughly and to be aware of varying terms and conditions, which can include substantial fees and limitations. There may be fees associated with requesting customer service, adding funds to the card and even inactivity. Some cards even have weekly base fees of up to $1.95 that can add up to more than $100 annually just to use the card. Carefully scrutinize each prepaid offer.
Prepaid gift cards are not insured under the FDIC protection that covers other bank accounts, nor are they covered by MasterCard or Visa for zero or limited liability, if the card is lost or stolen. There also may be some execptions on where a prepaid card can be used. For instance, car rental agencies or hotels may not accept them as payment. Consumers might also have a hard time using prepaid cards when paying a deposit for larger purchases.
Although there is no credit history benefits with using a prepaid card, there are also no risk of a consumer overdrawing and damaging their credit score. However, be sure to use any prepaid gift cards in a timely fashion to avoid possible expiration dates and service fees.
* Be sure to see our complete list of prepaid debit cards >