Reloadable Credit Cards

Photo © DreamstimeConsumer applies for a reloadable credit card at a banking center or through an online application. These applications ask for only basic information such as name, address, phone numbers, date of birth, and social security number.

The request for your social security number is not so that the bank can pull a credit report - it is simply required by law as part of the Patriot Act in order for banks to help the government identify and prevent terrorist funding.


Photo © DreamstimeThe bank programs a card with your unique account information and mails it to your address. Upon receipt of the reloadable credit card, the consumer must activate the card by following the instructions that accompanied the card in the mail.

Once reloadable credit cards are activated, funds need to be loaded onto the card. These funds can come from direct deposit of your paycheck onto the card or by depositing funds onto the card through retail stores. Most reloadable cards have made arrangements with a number of widely available stores, such as CVS and Walmart, at which their customers can make deposits to their card.

With activation complete and money loaded onto the card, the card can now be used like a regular debit or credit card. Every time the card is used for a purchase, the money is deducted from the available balance. When the account balance reaches zero, more money needs to be loaded before it can be used again.

Let's take a look at the reloadable credit card offer to the left. It mentions a number of free services like direct deposit, free card activation and free bill payment services.

If you click on that offer and follow it to the application page, you will find three tabs of information on that bank's offer. One tab says "Compare". Click on "Compare" and scroll down and find the section called "More Information" with a link to "Get Pricing and Fees". Click on "Get Pricing and Fees".

What is the first thing you notice?

There are a lot of free services....amongst a laundry list of other fees.

This is about the time you start thinking that this is not as good a deal as it first appeared.

However, it is only after we analyze these listed fees that we can truly understand the full cost of this reloadable credit card offer.

Don't be put off by the fees until you know what they mean.

The first thing you need to have on hand before you can analyze whether or not reloadable credit cards are for you is to know exactly how you are going to use the card. This should be easy to determine using any current or past debit card usage as your guide.

For example, let's say I'm a 19 year old college student with a part-time job. I get direct deposit from my employer and I need a card that I can use for books, food, shopping, and gas. Here are the fees from the prepaid credit card we looked at earlier:

Activating your card w/recurring direct deposit (otherwise; $9.95)

Adding Money via Direct Deposit or Cash
(Retail locations may charge a fee)

U.S. card purchases when using your signature

Transferring money from one card to another

Managing your account online, online statements

Paying your bills online with Bill Pay

U.S. card purchases when using your PIN

Deposit alerts, balance, and other account information sent to your cellphone with Mobile Text Alerts

Calls to a Customer Service Agent
(otherwise: 1 free call/month; $2 thereafter)

Automated phone system for account information (otherwise: up to $0.50)

Using ATM to obtain balance

Using a U.S. ATM to withdraw moneyFree


Free


Free


Free

Free


Free

Free

Free



Free with recurring Direct Deposit

Free with recurring Direct Deposit

$1.00

$2.00

In our example, the 19 year old student has direct deposit so that $9.95 is waived as are fees for reloading the card using other methods except maybe retail locations, credit transactions are free, as are PIN or debit transactions.

As long as the 19 year old student manages the account online or through text message alerts and not through the phone or ATM, the reloadable credit card is really free.

Any legitimate reloadable credit card application online has to disclose the terms of the account. Each account has a different fee schedule and each consumer uses these cards differently. The ONLY way you can find the best deal for yourself is to understand first how you are going to use and manage your reloadable credit card and then how a specific card's fee schedule applies to you.

A card that might be expensive for one person might be perfect for another. It all comes down to how the card is going to be used.

Following are some additional reloadable credit card and prepaid credit card offers that you can compare: