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Prepaid Gift Credit Cards

Prepaid Gift Credit Cards Offer An Affordable, Practical Alternative

Prepaid gift credit cards are not exactly credit cards, but they do bear some similarities to "pre-paid credit cards." There are essentially two types of pre-paid gift cards: Those issued by banks and credit card companies, and those issued by department stores and other retailers.

Both types of gift cards operate in a similar manner, but with some minor differences. And apart from making excellent gifts for any occasion, both offer a practical, low-cost alternative to credit cards for those with bad credit.

Bank Issued Prepaid Gift Credit Cards

Many banks and credit unions offer credit card gift cards. Here are some of the popular brands available:

Prepaid VISA Gift Cards

AMEX Gift Cards

MasterCard Gift Cards

Discover Gift Cards

Bank of America Gift Cards

These cards can be purchased with almost any dollar amount on the card up to $500, and sometimes considerably more. Their cost is usually $3 or so, plus the amount you want on the card. For example, a $200 gift card could cost you $203.

You have to indicate the name of the person that the card is for at the time of purchase, and the card will be activated within 24 hours if not immediately. Like a credit card, the recipient of the gift card will sign his or her name on the back of the card, and only the recipient can use it to make purchases.

What's more, there are no fees charged when making purchases using the card, and there are no restrictions with regards to age or credit on the user. Most cards of this type don't even carry a PIN.

Advantages

The advantage offered by this kind of prepaid gift credit card is that it can be used almost anywhere regular credit cards are accepted to make almost any type of purchase. It can even be used worldwide unless it's a "Domestic Use Only" card. A card that's accepted worldwide is perfect for travelers.

The card holder can even use it to make online purchases. Actually, some people prefer using these cards to credit cards when buying items via the Internet, as they offer little or no risk.

The only places where you might have difficulty using these gift cards are at hotels, car rental places, and pay-at-the-pump gas stations. That's due to pre-authorizations put on cards by these places to cover any incidental charges over the cost of the bill.

The card works similar to a pre-paid credit card. To pay for a purchase, simply give the card to the cashier and ask to sign the purchase receipt. The card can also be swiped through the keypad, and the "Credit" button pressed if need be. Each time the card is used, the transaction amount is automatically deducted from the card's balance until it reaches zero.

Things To Be Aware Of

Prepaid gift credit card owners should always be aware of their card's account balance before shopping as some stores cannot determine it at the time of purchase. Usually, the card company's toll-free number and a website address are printed on the card, and transaction amounts and remaining balances can be easily obtained.

Any transaction that exceeds the prepaid balance will be denied. In such situations, arrange with the merchant beforehand to use the balance remaining on the card to pay for part of the purchase, and then pay the remainder using cash.

A gift card should be kept even after its balance has been depleted in case purchased items need to be returned. You might be asked to present the card when returning the item purchased with it. Otherwise, a card with a zero balance may be safely discarded.

Department Store Prepaid Gift Credit Cards

These cards are sold by a wide variety of retail stores. Here's just a sampling of what's available:

GAP Gift Cards

Red Lobster Gift Cards

Foot Locker Gift Cards

Toys"R"Us Gift Cards

Barnes & Noble Gift Cards

Canadian Tire Gift Cards

The cards are sometimes offered in established amounts such as $10, $25, $50, or $100, but some stores will allow you to place almost any amount on the card up to a predefined limit, which could be from $100 to $500.

When you purchase the card, you pay an amount equal to the balance you want on the card, and the card is electronically activated by the salesclerk.

There are usually no fees involved in purchasing the card nor in using it. But, it can only be used at branches of the store or stores that are designated on the card. To use it, you simply present it as payment toward your purchases. The cost of your purchases will be deducted from the card's balance until the balance reaches zero.

Advantages

Department store gift cards are more limited in where they can be used than the bank issued gift cards, but they can be most useful in circumstances apart from gift giving. For instance, out-of-town students could use a reloadable gift card as they would a "prepaid credit card for students" when making basic purchases at a specific store.

Such cards are practical and good to have on hand for times when cash is scarce. The key would be to supply the student with a prepaid gift card that's redeemable in a store supplying a wide variety of products. For example, a Wal-Mart Gift Card could be used to purchase clothing, toiletries, hardware, and even basic food items.

Things To Be Aware Of

You should be aware of the cash balance remaining on your prepaid gift card before shopping, since transactions exceeding the prepaid balance will be denied. To avoid an inconvenience and potential embarrassment, simply arrange with the merchant beforehand to use the amount left on the card to pay for part of the purchase, and then use cash to pay the remainder of the purchase.

There are two reasons why you should still keep a prepaid gift credit card after its balance has reached zero. With some cards, refunds on items purchased with the card will be reapplied to the card. Also, some cards are reloadable at the store and can be used again if desired.

Compare The Advantages, Then Decide

Prepaid gift credit cards make a perfect gift for birthdays, weddings, and special occasions. They can also offer a practical alternative to a regular credit card for those with bad credit or no credit history, and for those wanting to purchase goods online safely.

Indeed, most prepaid gift credit cards can even be used by children and teens, and they offer an excellent way to teach responsible card use.

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