Prepaid Reloadable Credit Cards: A Good Choice for Privacy?
In today’s climate, you’re at high risk of both identity theft and invasive government tracking pretty much everywhere you go. So, it’s a smart move to consider all the options when it comes to your financial transactions.
There are so many choices these days:
- credit cards
- debit cards
- gift cards, and
- prepaid, reloadable debit cards
Credit cards and debit cards are easy to hack. And even easier to track.
Using a gift card or cash makes you anonymous, but you don’t have any recourse if you’re mugged or you lose your money. It’s just gone.
You might think that reloadable debit cards provide a nice balance by securing your privacy and helping to protect your money from loss. Unfortunately, these bits of plastic don’t provide nearly the benefits that you might think…
Billions upon Billions
Billions upon billions of dollars are loaded onto prepaid reloadable debit cards every year. People are flocking to this new class of card in droves. Many have turned to prepaid, reloadable cards for convenience and to keep their financial information more secure.
But these cards are far from anonymous.
Not a Smart Privacy Play
Getting a reloadable, prepaid debit card requires you to share the same financial details that you would to open a bank account.
The issuer will ask for your name, phone number, address, social security number and birthdate. Because these cards are often linked to a traditional bank account for easy “reloading,” you may be requested to provide that account number, too.
This eliminates much of the perceived benefit of using this type of card. When you sign up for one, your personal information goes into a database. And if it exists on a database, it can be hacked.
When you shop with one of these cards, your financial details become vulnerable. And when you make purchases with these cards, those purchases can be traced back to you.
Unfortunately that’s not where the bad news ends.
Prepaid, reloadable debit cards have some additional problems.
- Customer service standards are often lower than for standard credit cards.
- Some issuers charge additional fees for customer service or to provide you with account information related to your own card.
- Many cards have an activation fee and some even charge usage fees, taking a cut of your funds every time you make a purchase.
- The issuer does not have to be transparent about their fee structure.
- Some issuers do not provide protection in the event your card is lost or stolen.
Some of these prepaid cards offer the worst of both worlds – no additional privacy and less financial security.
That doesn’t mean they aren’t without their uses, though.
3 Situations Where Prepaid Cards Make Sense
Despite their drawbacks, these cards can be useful in specific situations.
- Credit Card Stand-In
Sometimes you need a credit card to do everyday things like rent a car or book a hotel room. If you don’t carry a credit card or if your credit score is low and you can’t get a credit card, then a prepaid debit card can make these transactions possible.
- Teen Spending
If you have a teen in your life, a prepaid card can work like a credit card on training wheels. It helps your teen learn to use credit without getting into trouble with running up high balances and paying interest rates.
Some people have a tough time sticking to a budget. A prepaid card can come in handy in this situation, too. At the beginning of each month, or after each payday, you could load your spending money onto the card. When it’s gone, you’re out of disposable income until the next payday. It’ll help you stick to your spending limits.
If you plan to get a prepaid, reloadable debit card, make sure you read up on the fine print so you know what to expect in terms of fees and protections (or lack thereof).
For online purchases that you want to make privately – such as setting up an anonymous, prepaid cell phone service – a gift card from a major bank makes much more sense.
Remember: Gift cards are not reloadable and they are not tied to any of your personal information. That means you can make purchases with them online or off without compromising your identity and without government snoops tracking what you’ve bought.
Just don’t lose it … if you do, you’re out of luck.
P.S. – Sending you this valuable free research is the least i can do. My way of thanking you for hearing me out on a subject of importance to your family. The more people who help themselves, the safer we will all be. The ranks of like-minded Americans who are quietly creating a home food reserve are growing. And they’re enjoying a sweet tax-free financial gain to boot. It’s easier than you think. I’ll show you how.