If you're looking for a prepaid credit card take a few minutes to read through the pros and cons of using them and see if you still really want or need one.

How does a prepaid credit card work?

You buy a card at your local grocery store or you can order one online. You then pay a small activation fee to activate it. Then you desposit money onto your card either through your checking account or using direct deposit. Then you can use it anywhere Visa or MasterCard are accepted.

After you activate it and load it with money, you can use it just like any other credit card.

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Now let's talk about some of the benefits.

Pros of Prepaid Credit Cards:

You stay out of debt. You can only spend what is loaded onto the card and that money came from your checking or savings accounts. You cannot spend more than you have on the card. This is a good way to control your spending.

You pay no interest charges. Millions of people are stuck paying interest on their credit cards for stuff they bought years ago. You don't have to worry about this because there are no interest charges to get you deep into debt.

You pay no late fees or over the limit fees. You cannot be late on your prepaid credit card because it's your money that is paying for your purchases.

No risk of identity theft. Your privacy is safe when you buy one. You can do all your shopping online, rent a car, or book a hotel without risking anyone getting access to your checking account.

Those are some of the main benefits. Now let's take a look at some of the negatives.

Cons of Prepaid Credit Cards:

Fees, fees, and more fees. You usually have to pay an activation fee, a monthly service fee, ATM fees, inactivity fee, cancellation fee, bill pay fees, and paper statement fees. You have to pay a lot of fees to use your own money.

No guaranteed reporting to the credit bureaus. Many people use prepaid cards because their credit is not so good. Some prepaid cards report to the credit reporting agencies but others do not. Try and find one that does and you can start rebuilding your credit. But even still a prepaid card is similar to a secured card so your credit will not improve that much.

Have to sign up for direct deposit to lower fees. To avoid many of the monthly fees or transactional fees you have to sign up for direct deposit. You may not want to have your entire paycheck put onto a prepaid credit card.

Should You Use Prepaid credit cards?

That is ultimately up to you. You have to decide if the benefits outweigh the costs. You should not have to pay so much just to use your own money. There are cards with low fees but you have to search for them.

Click Here For The Best Prepaid Credit Cards