Your Buy a Prepaid Card

Prepaid gift cards are everywhere. Since Congress passed legislation restricting bank fees under the CARD Act, banks have been looking for ways to make extra money to make up for the short fall in fees. Since reloadable prepaid cards are less regulated, they've become a news source of revenue for financial institutions. Here is what to look out for before you buy one:

1. What out for Fees

Despite claims to the contrary, re-loadable cards still come with fees. There is activation fees that are charged when you buy the card and this ranges from $4.95 to $9.95. Some prepaid charge as much as $14.95 for activation. If you are buying a non-re-loadable card, it's important to consider the fees before you buy since they are one time use only. If you plan to use the card for a long period of time, it may be best to buy a re-loadable one since you can add money to the card once the initial balance is exhausted - without the need to pay another activation fee.

2. Expiration Date

Congress passed a law extending gift card expiration on closed loop gift cards to 5 years from the purchase date. Closed loop gift cards are the ones that are merchant specific. For example if you buy a Macy's card, you can only use it at their store. However the law did not cover open loop gift cards, which are issued by banks - Visa, American Express, Discover and MasterCard - which can be used anywhere the issuer cards are accepted. When you buy an open loop version, be aware of the expiration date and be sure to use the card before it expires, otherwise you forfeit the remaining balance on the card.

3. Another thing to watch when buying a prepaid card is the whether that card is for one time use or is re-loadable. A non-re-loadable card means that once the initial balance on the card is spent you cannot add any more money to the card so if you're looking for a card that can be used for a long time, this is not your option. With re loadable prepaid cards, you can I add money to the card when the initial balances is spent and you can keep adding money until the expiration date. These cards are usually best for people who are looking for credit card substitute., however, due to the convenience and longevity, re loadable prepaid cards come with a lot of fees so be sure to check all the fees that come along with the card before you buy it.

4. Functionality

The last thing to consider is functionality of your prepaid card. Some prepaid cards cannot be used to shop online or cannot be used on eBay or with Pay Pal so be sure to check it before you buy. Also, even with the prepaid card that's approved for online shipping, you have to register it with the merchant and add your billing address to before you can use it online. In addition, not all prepaids offer direct deposit or bank transfers. If you plan to have your paycheck deposit onto your prepaid or plan to transfer money from your bank account to the card, you should be sure that you are allowed by the issuer to do that.