How Is the Capital One Prepaid Card Different From a Credit Card?
Unlike most credit cards, which allows holders to use the creditor's money for purchases, the Capital One Prepaid MasterCard requires the cardholder to add funds that are subsequently made available on the card for purchases. The Capital One Prepaid MasterCard is convenient for individuals who do not qualify for a credit card or who would otherwise prefer not to use credit.
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Obtaining Card
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Obtaining a regular credit card requires a complete credit check by the issuing financial institution. By contrast, because the Capital One Prepaid MasterCard is not a credit card, there are no credit checks necessary.
Spending Limit
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When a regular credit card is issued, the financial institution provides the credit limit issued which is based in part on the cardholder's credit history. With the prepaid MasterCard, the amount available on the card is the amount funded by the cardholder. Capital One permits the card to be loaded via direct deposit, Western Union or from a bank account.
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Considerations
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The Consumer Action Website says that although prepaid cards may sound convenient, consumers should consider the fees associated with using the card and where the card can be used.
Fees
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Common fees associated with a credit card include items such as interest on the cardholder's outstanding balance and late fees. The Prepaid MasterCard does not impose such fees, because the holder may never carry a balance or pay late. The fees associated with the prepaid card include a $4.95 monthly maintenance fee if the holder loads less than $500 in a transaction cycle as well as various fees for ATM withdrawals and for paper bill payments. Foreign transactions are subject to a 1 percent foreign transaction fee.
Usage and Benefits
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According to Capital One, its prepaid MasterCard can be used wherever Debit MasterCard is accepted, worldwide. Benefits of using the prepaid MasterCard include that holders need not carry around large amounts of cash and that they are not responsible for unauthorized purchases if their card is lost or stolen.
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References
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