Life without credit cards often frustrates many people because they often have difficulty shopping online, renting cars and securing various other services. These people often experience embarrassment as their friends and coworkers exclude them from events, treating them like second-class citizens. Those who suffer from no credit, slow credit or poor credit can still find ways to navigate the cashless world. One of those ways involves the use of prepaid credit cards.

Major credit card companies such as MasterCard and Visa offer prepaid cards that look like and act like credit cards, although they work more like a debit card. Almost anyone can get a prepaid credit card because they require no credit checks or Chex Systems confirmations. Another way prepaid cards differ with traditional credit cards is by their inability to carry a balance. Stores decline prepaid cards when they have insufficient funds. This means no interest charges and no minimum payments, so cardholders can shop without fearing their inability to pay future bills. Also, since prepaid credit cards have no links to bank accounts, shoppers never have to worry about incurring expensive overdraft or NSF charges.

Employers who require direct deposit for payroll checks offer one reason prepaid credit cards face higher demand now than ever. Workers without bank accounts can sign up for a prepaid credit card and then use it for payroll direct deposits. To help lure unbanked workers, prepaid companies usually offer to accept direct deposits for little or no cost. Most prepaid cards have extra ways to apply money to them. For example, most cards offer ways to add money by buying a special card at a local store. Some prepaid cards allow for deposits via PayPal, bank account debits and other credit or debit cards. When shopping for one of these cards, prospective cardholders should verify the card they buy has an acceptable way to deposit funds.

Prepaid credit cards usually come with a lot of fees. These can include monthly maintenance fees, ATM access fees and deposit fees. These fees can cost more than a basic checking account, but they usually cost less than paying for check the cashing and bill-pay services cardholders would use if they had no alternative. Fees for prepaid credit card products, however, vary by product, so customers should carefully evaluate which one has the lowest rates.

For most routine transactions, holders of prepaid credit cards operate just as though they had a credit card. Unlike credit cards, however, these prepaid cards rarely have any associated rewards programs such as frequent flier points and cash back incentives. Another way prepaid cards differ involves car rentals. When the rental company detect that a potential customer presented a prepaid card, the rental car company will usually require different terms, including a substantial deposit. In some cases, rental companies may not accept a prepaid card at all, leaving an important product out of reach to millions of possible customers.

For most people on most days, prepaid credit cards work well. They may cost more than a credit card, but they give people with poor credit a convenient way to shop.