Prepaid credit cards

Want to establish credit for the first time, or re-establish credit after bankruptcy? Prepaid credit cards may be the answer for you. They may also be the answer for students and their parents, and may be the only answer for people living in some developing countries.

In today's cashless society, it is difficult to get along without a credit card. It's almost essential if you want to buy anything online, although the cumbersome route of sending a check is possible in many cases.

70 million must pay cash
But some 70 million Americans don't have checking or savings accounts, credit cards or debit cards. If they receive a check, it costs them up to 20% to get it cashed. Paying bills can be a nightmare, trekking to various offices and paying them in person. Hotels, car rentals and the Internet are mostly off limits. The American Dream relies on credit cards.

Prepaid credit cards are also a way to control spending to amounts you can afford. You can't overspend, even if you want to. Other advantages include no credit checks and no interest charges. They are a convenient way the transfer money to the cardholder at no cost, handy, for example, for international students. Prepaid credit cards are easy to get online, and can be used almost anywhere where MasterCard or Visa cards are accepted.

Learning tool
A prepaid credit card is a useful learning tool for children. Pay the initial setup fee (usually from $5-50), and let them pay the smaller renewal fee when the initial period expires. Teach them that if they let it lapse they have to start all over again with a much larger fee. A lesson in financially responsibility.

College credit used to be something you earned by attending class. Today, it often refers to how much a student owes. Seventy-eight percent of college students carry at least one credit card. Average debt is $2,748, according to one source. A prepaid credit card is a great way to start teaching kids that money doesn't grow on credit cards. It allows students to carry money safely, to have it available when needed, and parents to have control over teen spending.

• The Vaya MasterCard, as with most prepaid credit cards, requires no credit check or bank account. Direct deposits are free. There is an application fee of $49.00, and a monthly fee of $5.95.
• Wired Plastic Prepaid Visa offers one point for every $1 spent. Points can be redeemed for prepaid wireless, Internet or calling card airtime. Cash can be added through Western Union offices. The activation fee is $9.95, and the monthly fee is $3.95. There are fees for various types of transactions.
• Liberty Union Prepaid Visa Debit card has no activation fee, a monthly maintenance fee of $4.95, plus usage fees, which include $10 a month on inactive accounts.