Ask Andy: Pre-Paid Debit/Credit Cards - WMC Action News 5 - Memphis, Tennessee

Ask Andy: Pre-Paid Debit/Credit Cards

(WMC-TV) - Many desperate folks who are undisciplined with standard credit cards are opting for pre-paid debit or credit cards to rebuild their credit.

They can't spend beyond what they pre-load on to those cards, so the cards are considered a short-cut to a better credit score.

They may be a short-circuit, instead.

Bill Hardekopf, CEO of the Birmingham-based, said pre-paid cards are often loaded with fees that can be big-dollar gotcha's.

Those gotcha's include ACTIVATION FEES. Hardekopf said the activation fee can be as high as $20.

They often carry ANNUAL FEES that can be as high or higher than the annual fees on standard credit cards.

Then there are the TRANSACTION FEES. You know how you get hit with a fee when you use your debit card at another bank's ATM? Well, some pre-paid debit and credit cards often charge transaction fees every time you use them to withdrawal cash, no matter what bank it is.

Hardekopf said the true test of a pre-paid card is whether it reports to one of the three credit bureaus:  Experian, TransUnion and Equifax.

"Look to see if the card issuer reports to a credit reporting agency," he said. "If they do, then having (a pre-paid) card and managing it well will help you rebuild your credit score.

"If it does not report to one of the big credit reporting agencies, then having that card will NOT help you build your credit score."

To shop's list of pre-paid cards with reasonable fees, please click here:

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