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What NOT To Use a Prepaid Credit Card For

Updated on December 11, 2009

As you read through the "TERMS AND CONDITIONS" of the various prepaid credit cards, you quickly realize that there are some things that you are asked to refrain from when using the card, and other things that you can not use the card for. What gives?

There are a set of purchases you are asked to refrain from, or at least be aware that you need more money on the prepaid card for that purchase, than just the purchase price. These purchase types are ...

#1 - Purchasing gasoline at the pump

When you buy "gasoline at the pump", the pump does not know how much gasoline you will actually buy. So, when you insert your prepaid card into the pump's card reader device, the business has set a preset amount to lock on your prepaid card. For most business, them amount that is lock on your card will be around $100.00! So, if you only pump $20.00 worth of gasoline, the $100.00 is still locked on your card.

Only after the $20.00 is taken from you card an given to the gas station business will the $80.00 be made available back to your card. This can take from 2 to 3 days. Actually, the gas station would have gotten it's $20 in about one to three hours. Then why the two to three day delay in releasing your $80.00 in your account? I'm still checking on that!

#2 - Renting a Hotel room

The same rule applies here as with the gasoline pump. A certain amount of money will be locked on your prepaid card until the hotel receives its payment. The only difference is that a hotel can potentially lock up more of your money then a gasoline station.

#3 - Renting a car

Again, the same rule applies here as with the gasoline pump. A certain amount of money will be locked on your prepaid card until the car rental business receives its payment.

Please note, that when I point that some of your money on the prepaid card will be locked, I mean that the money will still be on your account and in a few days it will be released. But, during the time your money is locked, you CANNOT use that lock money for any purchases regardless of your needs.

This is why you need t plan how you will use your prepaid card for purchases. Here are a few simple "rule of thumbs" that I follow.

— When purchasing gasoline, pay for it on the inside. By paying on the inside, you can tell them exactly how much money you want to spend on gas, and only that amount of money will be removed from your account. No locked funds.

— Do not use a prepaid credit card for renting a car. To reserve a vehicle can result in funds being locked on the card. Including if you later decide to not rent the car.

— Do not use a prepaid credit card for renting a hotel room. Also, do not use a prepaid credit card to hold a reservation. To reserve a room will result in funds being locked on the card.

Some prepaid credit cards also point out purchase types that are just not allowed. This means that the prepaid credit card company will deny a transaction for purchase of that type of product or service. To find out what transactions any one specific prepaid credit card company will not process, you again need to review the "Terms and Conditions" statement, or in some cases, the "Users Agreement" statement.

Almost all the prepaid credit cards "Terms and Conditions" point out these things out. As always, you need to read the "Terms and Conditions" statement to determine what you specifically can and and cannot do with their prepaid card.

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    • profile image

      Melvin Dunn 

      6 years ago

      I've really noticed that credit repair activity really needs to be conducted with tactics. If not, chances are you'll find yourself causing harm to your positioning. In order to grow into success fixing your credit rating you have to ensure that from this second you pay all your monthly fees promptly before their appointed date. Really it is significant on the grounds that by not really accomplishing that, all other actions that you will take to improve your credit position will not be useful. Thanks for revealing your thoughts.

    • lovelypaper profile image

      Renee S 

      8 years ago from Virginia

      Good to know. Thanks.

    • needful things profile image

      needful things 

      9 years ago from Poland

      Hmmmm.... I always use my prepaid. The true is only for emergencies. :-)

    • MoneyManagement profile image


      9 years ago

      yeah, prepaid credit cards can come in really handy but you have to know how to use them.

    • Lady_E profile image


      9 years ago from London, UK

      Wow. This is nice to know. I don't have a prepaid one but should be able to give advice to anyone using one.

      As you know, not all people read the small print. (T & C'S)


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