EXTENSION CONNECTION: Defining prepaid or reloadable cards

Published: Tuesday, March 19, 2013 at 06:18 PM.

Prepaid cards — though sometimes marketed as "prepaid credit cards” — are not credit cards.

The card issuer offers no credit; the cardholder merely spends money that he or she placed on a card. The card number uniquely identifies a record in a central database where the balance is recorded.

In many ways, a reloadable card is similar to a credit or debit card. Like most debit and credit cards, many reloadable cards carry a logo from one of the major electronic payment networks — Visa, American Express, Discover or MasterCard.

Any business that accepts these logos likely accepts reloadable cards.

Poor credit

Prepaid cards are marketed to consumers with poor credit who don’t qualify for a credit line that backs a mainstream credit card. Fees associated with these cards are often very high.

Though convenient, these cards can be an expensive way to spend your own money.

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