But what about people who do not have a bank account or who lack the credit history needed to be approved for a MasterCard or Visa?
Prepaid cards are a convenient alternative
For people who do not qualify for the usual forms of credit or debit card, a prepaid card is the best answer. These can provide the convenience of traditional cards without the hassle of the application process.
There are no credit checks for prepaid cards. They are available at large chain banks, many major retailers and drug stores, and even through the post office.
To walk out of the store or bank with a new card, you will only need an ID and money to load into your new account. If you do have a bank account or PayPal account, you may be able to set up a money transfer instead of depositing cash.
Which prepaid card to choose?
Non-reloadable cards, sometimes sold as Visa or MasterCard “gift cards,” may not require an ID to load, but the activation fees are generally higher.
This leads us to the main drawback of prepaid cards. Most do charge an initial activation fee and many reloadable options have monthly fees as well. These charges can vary widely from a couple dollars to $20 per month. Because of this, it is very important to research the cost before you decide which card is the best for you.
Another thing to decide before you get a prepaid card is what you will use it for. All online retailers will accept prepaid cards, but many will only do so if they are associated with a specific person (that is to say: only if they have your name printed on them). Banks and other financial institutions can provide cards that have this level of identification, but some retailers only have “anonymous” cards that may not work online.
If you simply want the convenience of not having to carry cash, any prepaid card will do. Every type of Visa or MasterCard prepaid will work at a brick-and-mortar retailer.
A financial tool for everyone
People tend to focus on the negative aspects (such as fees), but prepaid cards also have several positive attributes. One of the most overlooked traits: prepaid Visa and MasterCard cards have the same zero-liability protection that the two companies’ regular debit and credit cards have. This means that you will not be responsible for unauthorized charges. If someone steals your wallet or uses your prepaid card’s number to make an online purchase, you will not lose your money.
This mix of perks and convenience makes prepaid cards a great option for anyone, but especially for those who cannot easily get a traditional credit or debit card.