Prepaid debit cards are the latest fashion statement. From hip-hop mogul Russell Simmons’s RushCard to Suze Orman’s new Approved Card, debt-leery consumers are turning to these highly hyped products.
But packing a prepaid card has more cons than pros. The RushCard costs $4 to $15, depending on the design you select. Monthly fees as of March 1 range from $6 to $8 (including two free ATM withdrawals per month). The Approved Card costs less: $3 to buy and $3 a month to use after the first month; withdrawals at Allpoint ATMs are free, if you deposit $20 each month. But for all that, your usage will not be reported to the credit bureaus. As Ben Woolsey, director of consumer research for CreditCards.com, explains, "Prepaid cards have no utility in helping someone build credit."
A secured card can be a better option. You deposit as little as $49 -- or as much as $10,000, depending on the issuer -- and that sum becomes your credit limit. Issuers report your usage to the three major credit bureaus, and you may even earn interest on the money on deposit. Annual fees range from $25 for the Wells Fargo Secured Visa to $39 for the BankAmericard Fully Secured Visa. You generally qualify for an unsecured card after using a secured one responsibly for a year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you still think a prepaid card is the way to go, the American Express prepaid card is an option. There is no charge for the card if you order it online, and there are no monthly fees. You get one free ATM withdrawal per month. Using the card for six months helps you build a financial history with Amex, which may help you qualify for an Amex charge card.
-
403(b) Contribution Limits for 2024retirement plans Teachers and nonprofit workers can contribute more to a 403(b) retirement plan in 2024 than they could in 2023.
-
Roth IRA Contribution Limits for 2024Roth IRAs Roth IRA contribution limits have gone up for 2024. Here's what you need to know.
-
Four Tips for Renting Out Your Home on Airbnbreal estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute VacationTravel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
-
How Much Life Insurance Do You Need?insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.
-
When Is Amazon Prime Day?Amazon Prime In 2023 Amazon had two Prime Day events — one in July and another, called Big Deal Days, in October. We expect 2024 to follow the same schedule.
-
How to Shop for Life Insurance in 3 Easy Stepsinsurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
-
5 Ways to Shop for a Low Mortgage RateBecoming a Homeowner Rates are high this year, but you can still find an affordable loan.
