How Reloadable Credit Cards Work

Reloadable credit cards work much like a checking account except rather than using checks to draw against the amount you have on deposit, you use a Visa or Mastercard branded card.

You deposit your money with the financial institution who has given you the card and then use the card to pay for things at any location that takes Visa or Mastercard. The amount of any purchases you make is deducted from the amount you have on deposit.

You can reload the card with more money at any time. Many banks and card companies offer a number of ways in which you can reload your credit card:

DEPOSITS:

Direct Deposit – Have your employer direct your paycheck electronically to your prepaid or reloadabale credit card account and have your money available more quickly than cashing a check. This saves on check cashing fees if you don’t have a checking account.

In Store Deposits – Your prepaid card company will outline for you in their terms and conditions the locations at which they’ve arranged for their customers to make cash deposits to their reloadable credit card. Many institutions accept money deposited at popular and widely available stores like Moneygram, Western Union, Walmart, CVS and many grocery stores. This makes it convenient to deposit money while you are out running errands anyway.

Online or Phone Transfers – Move money from existing deposit accounts to your reloadable credit card online or by phone.

Once money has been loaded to your card, you can use the card to make purchases and even pay bills online out of your card balance if this is a service being offered by the provider of the card.

CHARGES:

Visa/MasterCard Transactions – Use the card anywhere Visa and MasterCard are accepted. While these cards are often called reloadable or prepaid credit cards, they operate like a debit card.

Online Bill Pay – If your provider’s services include online bill payment, you can establish a log in and password combination in order to manage the funds deposited on your reloadable card and instruct the company to send money to another organization to pay your bills. You can usually set up payments to any person or company you decide which means you can pay rent, your utilities, even doctor bills with your prepaid card.

ATM – Use any ATM to take cash out of your account. There is usually a fee for doing so and ATMs within the institutions designated network (Star, etc.) are often less expensive than using outside networks.

There are several reasons people would want to use a reloadable credit card instead of a regular credit card or checking account for managing their money. For example, if you do not quality for a checking account but are receiving paychecks, the inconvenience and expense of cashing your paycheck is costly. With a reloadable credit card, nearly anyone can have immediate access to their paycheck – no trips to convenience stores or money stores and no fees for cashing that check.