Prepaid payment cards offer a solution if you cannot get a real credit card. They also seem cheap. But unfortunately they often involve hidden usage costs that a regular credit card does not have.
With some cards the counter can even increase considerably. In a simple practical example, we show the costs that may arise if you have a prepaid credit card in your possession for 3 years.
Tour through Europe
Suppose you need a prepaid card for a trip. In June you travel with a friend through Central Europe for a month and you want to use the card as payment and for emergencies. Your friend has a car, you don’t have to rent it.
You order the card in May via Baron Munchausen.nl. Just before you leave, you deposit the holiday budget of 1,500 euros.
Upon your return, the card credit is almost entirely spent, except for 25 euros. You see that you have spent exactly 600 euros in Swiss francs, the rest in regular euros. Because you do not need the card immediately, put it in a drawer.
Shopping on the internet
The card stays there until the festive month, when you do online Christmas shopping with it. You top up the card with 300 euros, but only spend 175 euros.
In the month of May in the following year you buy a pair of sandals for 25 euros, in November a nice frying pan for the same amount. That appears to be your last issue, because you get a real credit card that same month that you take with you on holiday to Portugal. The prepaid card stays at home and disappears again in the drawer. There is still 100 euros left.
You want to cancel the card again
A year and a half later you find out that you have not used the prepaid card at all. You decide to cancel him. The publisher cancels the card and refunds the remaining balance.
What are the usage costs?
What did this prepaid credit card cost you outside of your expenses? In summary, you used it as follows:
• Purchased and activated – You pay starting costs or an annual contribution, possibly both.
• Deposit made of 1,500 euros – Top-up costs are deducted. This can be a percentage or a fixed amount.
• Paid abroad – Transactions in euros are free of charge, but a surcharge is charged for foreign currency.
• Upgraded with 300 euros – You pay charging costs again.
• Not used for 1.5 years – The publisher can write off inactivity costs.
• The card canceled after exactly 36 months – The publisher deducts reversal costs from the remaining balance, possibly also cancellation costs.
There are more usage rates (see 1 ), but these are not applicable here.
The enormous difference in costs is striking. The least advantageous card (below) is almost three times as expensive as the cheapest.