Some of the offers on this page may not be available through our website. Prepaid credit cards are convenient and easy to use, but they don’t function exactly like credit cards. They have limitations, aren’t a credit-building tool, and can come with costly fees. If your goal is to earn rewards, look into using a rewards credit card instead. While prepaid credit cards are convenient and easy to use, they have some drawbacks. Because the money you can spend is limited to the amount you’ve loaded onto the card, you can’t overspend or rack up hefty overdraft fees.

What Are the Benefits of Postpaid?

When you use a credit card, you’re borrowing money to pay for a purchase. Your spending and payment activity is reported to all three credit bureaus special revenue funds used for budgeting but not financial reporting and therefore is shown on your credit report. Some parents use prepaid credit cards to help children and teens learn more about money management.

Prepaid Expenses

The main difference is that with prepaid phones, payment for service is made before use. As calls and texts are made, and as data is used, deductions are made against the prepaid balance amount until no funds remain (at which time services stop functioning). A user may avoid interruptions in service by making payments to increase the remaining balance. Some prepaid debit cards also come with extra protection for customers, making them safer than cash payments. ZEN Mastercard users, for example, get ZEN Care Shopping Protection.

The best prepaid phone plan overall

Debit cards can be a good choice for anyone with a checking account since they provide easy access to your money and don’t need to be reloaded. If you want fee-free access to your money, consider using a no-fee checking account, such as the Capital One 360 Checking® Account, which has no monthly fees whatsoever. The history of prepaid mobile phones begins in the 1990s, when larger markets were being sought after by the mobile phone operators. Before this date, all mobile phone services were offered on apost-paid basis, which excluded people with poor credit.

Comparing the plans (and perks)

1. Once you’ve picked your plan type, the next decision is which provider to use.
2. It’s also not money that is borrowed from a lender, like a credit card.
3. Wise cards can be used in 170+ countries around the world, so no matter where you’re headed, Wise is there to help.
4. Since you are billed monthly for the services you use from the network, you need to have an account with the mobile provider.

Instead, the prepaid card can only be used for spending the money you already have. Most prepaid debit cards are connected to a merchant like Mastercard or Visa. This means you can shop anywhere these cards are accepted, including online and in-stores. This makes them a convenient alternative for people who don’t want to use credit cards but want to enjoy the same ease of shopping.

Ultimately, switching to a prepaid plan is a great way to save money. You’ll find lower monthly costs for the same coverage and a variety of features. Of course, data may be slightly slower than you’d experience https://www.adprun.net/ with postpaid services. There may be other reasons to get a prepaid debit card, such as limiting spending, giving a child an allowance or enjoying the convenience of paying with a card rather than cash.

Cons of a prepaid credit card

If you want a convenient payment solution and want to build credit, using a credit card may be the best choice. If you have poor credit or a low credit score, you may want to consider exploring credit cards for bad credit. If you don’t have cash on hand and want to pay with a card, you can easily use a prepaid credit card. They’re convenient and are accepted in most places, just like credit cards. The benefits of prepaid plans versus postpaid plans lie in the flexibility and control overspending. Similarly to prepaid plans, you select specific bundles of data and voice minutes depending on your needs.

If you’re looking for a payment option that allows you to earn rewards on every purchase, you may want to consider a Capital One rewards credit card. And with responsible use, like paying your statement on time each month, you could improve your credit scores over time. That said, you may want to use a prepaid card over a debit or credit card if you have a history of overspending. Giving yourself a tangible limit (the money you load onto the card) is a good way to help you stick to your budget. A prepaid card is also called a prepaid debit card, or a stored-value card.

Fees vary very widely, so it’s important to review the full details for any card you select before you start spending. The Wise card for example, lets you hold and exchange 50+ currencies with the Google exchange rate, and spend any currency you hold, fee free. Just top up your card to the amount you want to spend, and use it wherever your card network is accepted.

Although prepaid cards can be used in largely the same type of transactions as debit cards and credit cards, they are quite different in nature. Unlike debit cards, prepaid cards are not linked to a bank account and usually cannot be overdrawn. Unlike credit cards, prepaid cards aren’t connected to a line of credit and will not accrue debt. For even more options, be sure to read our guide on the best cell phone plans and deals available now and our full list of the best prepaid phone plans.

You can use a prepaid card to make purchases or pay bills—the same way you would a credit card or debit card. But similar to a gift card, a prepaid card is loaded with money in advance. You might hear prepaid cards referred to as prepaid debit cards, prepaid credit cards, pay-as-you-go cards or stored-value cards. A prepaid debit card is also different from a traditional credit card. You won’t need to undergo a credit check to get a prepaid card, and you’re not able to charge more than you have loaded onto the card. Prepaid cards can, however, come with high fees, such as monthly maintenance, ATM and reloading fees.

Another critical difference between prepaid phones and contract phones is how you acquire the phone. You can get a prepaid plan from a carrier like AT&T or T-Mobile, or you can opt to purchase a prepaid phone at a convenience store or big box retailer. When we pick the best plans, we put a premium on the monthly price, though we also pay attention to how much data comes with that plan. After all, a carrier may not charge you a lot for data, but it also may not provide enough data for your needs. We also consider a wide variety of data allotments, since some people can get by very happily using just a couple gigabytes of data each month, while others need an unlimited plan. Many phone carriers prioritize traffic from postpaid customers, so it’s possible that data rates can be slowed if you’re using a prepaid plan.

Similar to a debit or credit card, prepaid cards can be used to make purchases. But unlike those cards, a prepaid card comes with a balance that acts as a spending limit. Once you’ve spent the balance, the card can’t be used until you add more money to it. A prepaid mobile phone provides most of the services offered by a mobile phone operator.