Reloadable Credit Cards

Reloadable credit cards are all the rage, a debit or credit card of sorts which allow people to load up funds on their cards before using the cash online, in a store, or over the phone. Reloadable credit cards and debit cards can be tricky to understand for those who haven’t used them before, so we hope to explain this growing product in a way that can make you feel comfortable with a new financial product.

Reloadable credit cards are not bank accounts, nor are they actually credit cards. Reloadable credit cards are issued by companies who hold onto your cash and give you a credit card to spend the balance. The money is kept secure, and unlike a credit card you cannot spend beyond the amount that you have on the card. Many people use them because the inability to cause an overdraft means that you will never overspend, nor will you accrue costly bank charges.

A reloadable credit card can be reloaded at any number of locations. Walmart, for instance, sells the popular GreenDot reloadable credit card, which allows you to make a deposit at most Walmart locations to spend your cash at any place where Visa or MasterCard is accepted.

Most reloadable credit cards do come at a cost, however. Here are some of these costs:

Account maintenance – Account maintenance charges are often applied each month when the cardholder does not keep a sufficient minimum amount on the card. Typically, reloadable credit card companies want you to keep at least $1,000 on the card, and will waive these fees if the customer keeps a balance that high. Balances of less than the threshold amount often mean a monthly service charge of $4-10, in line with fees offered on checking accounts from private banks.

ATM Fees – Your reloadable credit card can be used as a debit card to make transactions at an ATM. The ATM fees vary by location, and some banks that issue a reloadable credit card will waive the fees for their specific card. Keep in mind that ATM fees can be averted by keeping some cash off the card for use on small purchases and charges.

Statements – Statements can be mailed to you, or found online for free. Always be sure to set up an online account if possible to eliminate the need to pay a monthly charge for a mailed statement. The internet makes this fee the easiest to avoid.

Card cost – Rare, but still a possible cost, you might have to pay upfront to buy the reloadable card itself, which should cost no more than $3-10. The card cost is intended to keep people from simply buying a new card each time they want to make a deposit. You won’t and shouldn’t pay this cost if you simply reload the same card over and over again.

A reloadable credit card is a great way for anyone to get access to payment by plastic. With approval being 100% guaranteed, and companies willing and able to allow people with no or zero credit to open a new account, it’s really easy to get a reloadable credit card to pay for all necessary expenditures.

Plus, some reloadable credit cards will allow you to automatically direct deposit your earnings from your job to your card at no costs.

More importantly to young users, a reloadable credit card can be used to shop online, making stores like Amazon or clothing chains more available to those who cannot get a credit or debit card, but who can pay the small cost of buying a reloadable credit card. Be sure to shop around, and pick a card which has the most convenient reloading options and locations to ensure you enjoy your card to its fullest.