Guide: Finding the Best Prepaid Credit Cards (Top, Free and Online Prepaid Credit Cards)

A prepaid credit card is exactly what the name implies—a payment card that can be used like a credit card, but that does not carry the risk of spending way more than you can ever pay back.

There are both benefits and drawbacks to relying on a prepaid credit card. This article will go over how prepaid credit cards work, where to get prepaid credit cards, and the fee structures they include. This article will also provide recommendations for some of the best prepaid credit cards.

How Does a Prepaid Credit Card Work?

A prepaid credit card works much like a gift card or any other reloadable card. You simply load it up with a certain amount of money, use it to make purchases, which are deducted from the card’s balance, and then once you have used all the funds on the card, you reload it.

For the most part, prepaid credit cards are accepted wherever credit cards are accepted. It may depend on the card carrier. For instance, if a vendor only accepts Visa, then your Visa prepaid card should work. With few exceptions, the best prepaid credit cards allow you to make purchases wherever regular credit cards are accepted.

Best Prepaid Credit Cards

Image Source: Best Prepaid Credit Cards

You can also make cash withdrawals at ATMs using a prepaid credit card. Whether it will be counted among free prepaid credit cards (meaning it has no ATM fees) usually depends on if you use an ATM inside or outside of the card’s network.

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Why Do People Choose to Use a Prepaid Credit Card?

Prepaid credit cards have become an extremely popular credit option in recent years. Americans fed up with overdraft fees, growing consumer debt, and their own impulse spending have turned to prepaid cards both as an alternative to traditional bank accounts and as a way to curb their own spending.

free prepaid credit cards

Source: Woolworths Prepaid MasterCard 

For some, making their transactions entirely in cash was the norm, but concerns over the security risks of walking around with huge sums of cash made prepaid credit cards a more attractive alternative. Others prefer the anonymity of prepaid credit cards with no fees or even with fees. They do not get this kind of anonymity when they make transactions using a card that is linked to a bank account, which keeps a record of their transaction history. And then there are those who do not mind having a checking account—they just can’t afford one.

What are the Drawbacks of a Prepaid Credit Card?

The biggest drawback has traditionally been fees, but this is on the decline. Prepaid credit cards are growing in popularity, even among people who use traditional banking products. As a result, more players are entering the market trying to position themselves as the provider of the best prepaid credit card.

Furthermore, prepaid credit cards do not have the same amount of regulation that traditional credit cards do, leaving consumers at risk of predatory fees that can take them by surprise and put a serious dent in the initial value of the card.

This can make it difficult to maintain confidence in prepaid credit cards with no fees or with fees as a safe and sustainable way to manage your money.

Fortunately, recent changes have increased federal oversight of prepaid credit cards. Prepaid cards are the fastest growing consumer product in the United States, since so many people rely on them for basic banking.

Approximately 65 billion dollars were put onto prepaid cards in the year 2012. According to the federal government, that number will rocket to $112 billion by the year 2018.

Providers touting the best prepaid credit cards would make a significant amount of money through an assortment of fees including activation fees, overdraft fees, balance inquiry fees, and even transaction fees from some providers.

Essentially, consumers were forced to take a hit every time they used the prepaid credit card for its intended purpose: managing money and making purchases.

Recent regulations have particularly targeted overdraft fees (a fee that defeated the purpose of not going into debt by using a prepaid credit card.)

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Finding Free Prepaid Credit Cards (Be Mindful of Offers for No-Fee Prepaid Credit Cards)

If you have your heart set on finding free prepaid credit cards (who wouldn’t want prepaid credit cards with no fees?) then you are setting yourself up for either disappointment or predatory hidden fees. Perhaps there are some no-fee prepaid credit cards we’ve missed, but we’d venture to say there are only a few legitimate ones, and your energy would best be spent finding one with a small monthly fee and limited hidden fees.

Why do we say this? Why are we so direct about crushing your hopes of finding no fee prepaid credit cards? Because any card that advertises itself as the best prepaid credit card with no fees is likely trying to draw you in so that you will get hit with other fees that come after the fact related to balance inquiries or cash withdrawals.

It may not be a monthly fee in the technical sense, but you certainly will need to check your balance or get your hands on some cash a few times a month.

Some cards do have extremely low monthly fees or they have monthly fees that can be waived in certain cases. These will be included in our choices for the best prepaid credit cards later in this article.

IMPORTANT: Prepaid Credit Cards Are Technically Prepaid Debit Cards (But They Are Not Secured Credit Cards!)

Here’s a big tip to keep in mind while searching for the best prepaid credit card: they are rarely referred to as prepaid credit cards.

There is a lot of ambiguity surrounding this area of financial products, which is made abundantly clear by the fact that even the regulations around these products are in a nascent state as well.

For instance, running a search for the best prepaid credit card will often bring you results for one of two options: the best prepaid debit cards or gift cards offered by major credit card providers.

Some links will be to major credit card providers who offer prepaid cards, and when you click on the link the text will refer to them as credit cards.

This is because a prepaid credit card, technically, is just a prepaid debit card. A credit card by definition is accessing money that you do not have. This is not so with a loaded card. So do not dismiss these search results; they are what you’re looking for.

In addition, prepaid cards (whether you call them prepaid debit cards or prepaid credit cards) should not be confused with secured credit cards. Secured credit cards require a security deposit, but your transactions are not subtracted from this deposit.

A secured card operates like a regular credit card, and you can choose to carry a balance each month and pay off your outstanding debt incrementally. Your security deposit is not used to pay your monthly balance.

If for any reason you completely default on this credit card, the bank uses the security deposit to cover their loss. In this way, a secured credit card is different from a prepaid credit card.

You will notice that it is difficult to find regulations regarding prepaid credit cards specifically. Instead, info from the Consumer Financial Protection Bureau will refer to this category of financial products as prepaid cards.

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Our Picks for the Best Prepaid Credit Cards (How to Find the Best Prepaid Credit Card)

Best Prepaid Credit Card for Minimal Fees: American Express Serve Card

The American Express Serve Card is one of the best prepaid credit cards. This prepaid credit card comes with no credit check, no minimum balance, and no hidden fees. Customers enjoy free withdrawals at more than 24,000 participating ATMs across the country. Other ATMs can be used as well, if needed, but fees may apply there.

The American Express Serve Card is also a prepaid credit card online. You can access an online account where you can make bill payments online or write a check that they will mail to someone. The flexibility of this prepaid credit card makes it one of the best prepaid credit cards.

This prepaid credit card also comes with an adjoining mobile app. Customers have access to American Express’s customer service 24/7 and fraud protection to provide added peace of mind for customers worried about stolen cards and fraudulent purchases.

On top of it, the monthly fee for this American Express prepaid credit card is only $1. The best part is that even this tiny monthly fee is waived if you set up a direct deposit of $500. It is these reasons, along with the other features, that make this a top pick on our list of the best prepaid credit cards.

Where to Get Prepaid Credit Cards Like the American Express Serve Card?

If you are wondering where to get prepaid credit cards like the American Express Serve Card, it’s simple. You can register online for free.  

BONUS: You can also pick from the suite of American Express prepaid credit cards.

Best Prepaid Credit Card for Money Management: Bluebird by American Express and Walmart

Bluebird by American Express and Walmart is a convenient prepaid credit card option for those looking for a money management solution without a bank account and who need a place to deposit their money, whether it is their work pay or government assistance. This is a great option for a prepaid credit card online.

This prepaid credit card online (which also comes with a physical card) comes with no monthly fees, no overdraft fees, free direct deposits, and free bill pay. That is more than enough for this to qualify for our list of the best prepaid credit cards as one of the best online prepaid credit cards. But it gets better.

This prepaid credit card can be used anywhere that American Express cards are accepted, giving you the flexibility and diversity of options that you need to experience the most financial freedom. And that is something you want with any physical or online prepaid credit cards.

This is also one of the online prepaid credit cards that gives you access to the 24,000 participating ATMs that allow you to access cash for free. It allows you to set up direct deposit of your checks from employers or from government assistance.

If you’ve been searching for where to buy prepaid credit cards, you can avoid making exploratory runs to neighborhood convenience stores. You can simply apply online for the Bluebird prepaid credit card.

Best Prepaid Credit Card: Chase Liquid Card

The Chase Liquid Card is free to activate. There are no fees for loading the card, making transactions with the card, or reloading the prepaid credit card. There is, however, a monthly fee of $4.95. There are also fees for using an ATM that is not part of the Chase network or if you have a returned item. The good news is that you can make purchases in-store and online and enjoy the features individuals usually do with a regular checking account like being able to send money to others via email.

Where to Buy Prepaid Credit Cards Like the Chase Liquid Card

Wondering where to buy prepaid credit cards from Chase? Unfortunately, this prepaid credit card cannot be bought online. You are required to go into a Chase branch, provide two pieces of government ID, fill out an application, and load $25 onto the card. You will receive a non-personalized card to use until your personalized card arrives in the mail.

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Where Can I Get a Prepaid Credit Card for International Spending? (International Prepaid Credit Card)

Those with upcoming travel plans may be wondering, “Where can I get a prepaid credit card for international spending? Is there such a thing as an international prepaid credit card?”

One option is the Visa TravelMoney card. This international prepaid credit card allows you to make purchases worldwide wherever Visa Debit is accepted, get easy access to currency by using local ATMs instead of going to currency exchanges, and the card is reloadable by phone or online anywhere in the world.

You get access to card and cash replacement in emergencies, 24-hour customer service, and fraud protection. All of this provides peace of mind while traveling with your prepaid credit card.

If you were wondering “where can I get a prepaid credit card for international travel?” you can visit the Visa TravelMoney website.

Prepaid Credit Cards Are Growing in Popularity as an Alternative to Bank Accounts and to Control Spending

Prepaid credit cards, prepaid debit cards, prepaid cards, a useful piece of plastic—whatever you want to call them these financial products can serve as a useful alternative to bank accounts.

They are also helpful for many people as a way to curb excessive spending and consumer debt. It’s important to carefully read the fees associated with each card, but so long as you do your research, you’ll find the best prepaid credit card to suit your needs.

With so many options out there, both online and in branches, you are bound to find a product that fits your needs. While prepaid credit cards cannot help you build credit and do not enjoy the same protections that bank accounts and credit cards do, they can be very helpful if used mindfully.

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