3 Restrictions that Apply to a Prepaid Cash Card

Using a prepaid cash card is a good idea for those who need to control spending, have no credit or cannot get a traditional checking account. There are a few restrictions that apply to their use. With a prepaid cash card, users cannot purchase items for more than the balance on the card, information is not reported to the credit bureaus and some items cannot be purchased at all. 

Cannot Purchase More than the Balance on the Card

With a traditional credit card, customers have a credit limit that you generally cannot exceed. However, some credit cards will allow you to go over the limit, and charge excessive fees when the limit is exceeded. Since customers cannot purchase more than the amount of funds on the card, there is increased budget control. Generally speaking, the prepaid card will have a certain amount you can load each month and spend each day without freezing the card. While these limits are high enough to accommodate most people, knowing what the limits are beforehand will help prevent any issue in the long run. 

Information is Not Reported to Credit Bureaus

Though some prepaid credit cards are designed to report to the credit bureaus, most of the time, the cards do not report any information to them. This means there is no credit check involved to get the card, and since the user is in control of the card, they control the limit and the spending. There is no risk of destroying a credit rating if nothing is done with the card, but at the same time, there is no benefit to building a positive credit rating either.

Some Items Cannot Be Purchased

Thinking about using the "pay at the pump" option? Most cards will not allow you to use this option, because the pump takes a large amount of cash to authorize the transaction. It may also be difficult to use the card to secure a hotel room or for any sort of gambling, depending on the specific terms and conditions of the card. Look closely at the rules for your card before you sign up and before you try to make any large purchase. For most people though, there is no issue with what can or cannot be purchased. If you want to purchase gas on your card, pay inside with your card to avoid the issue.

With the exception of these restrictions, a prepaid credit card works much like a regular credit card. Many people use them because they are an easy way to make purchases online without having to worry about what happens to the card or the money if the information gets compromised through a computer hack. Many people who are able to use a bank account and regular credit card get a prepaid credit card just for online purchases to their actual financial information is always completely safe. 

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