If you are looking for a prepaid Visa card, what you probably want is a card that functions just like a normal credit card for both in-store and online purchases. You want the card to be no different from a standard VISA, except that you pay whatever amount you want up front for the starting amount of credit you can use, and then add more as you go (or get a new card with a new number if that works out better for you.) What you don’t want is to pay monthly fees, or go through an invasive process of entering personal information and waiting weeks for a fully functional card.
Two prepaid VISA cards have recently become the nationwide leaders in sales and availability; the prepaid VISA gift card from Green Dot, available at Walgreens and other major retailers, and the Simon Prepaid VISA, available at any Simon mall across the country. While these two cards share the billing of “prepaid gift card”, there are major differences in the terms and how they function. The Simon card acts more like a true, disposable temporary VISA, while the Green Dot is more like having a secured credit card you are billed for monthly (and at pretty bad terms.)
Let’s look at the Green Dot card first. You purchase this card in a set denomination (from $15 to $200) at a Walgreens store, and in addition to the amount of credit available, you also pay a $9.95 “activation fee” to initialize the card.
The card itself has a 16-digit number with a checksum (CVV2) like a standard VISA card, so it can be used both in person and online. However, you have to enter personal information online at the Green Dot website before they mail you an actual card that you can use in person. For the few days that you have to wait for that card to arrive, you can only use the card number for online shopping. Also, the card requires that you prove your identity with your Social Security Number, and will have your name printed on it – it is not anonymous.
Green Dot, additionally, wants you to pay a $4.95 monthly fee to keep the card active, regardless of whether it has money loaded on it or not, or whether you are using it or not. Had enough fees? Well, guess what? There’s more! It’s yet ANOTHER $4.95 every time you want to load more money onto the card, unless you let Green Dot automatically take a cut of your monthly paycheck via Direct Deposit (the only option they offer to get free reloads.)
And, after all these fees, Green Dot doesn’t even report your information to the credit bureaus, so it can’t even be used as a way to build credit. Seriously, the only possible reason I could see for someone to pay all these fees is if they were in a social situation where they wanted to make people think they have a credit card when they aren’t able to actually get a real one from the bank. Otherwise, you are just throwing piles of cash at Green Dot for basically nothing in service.
The Simon Giftcard, on the other hand, works more like what you probably expect a prepaid VISA to work like. The only downside is that Simon malls are fewer and farther between across the country than retail locations that sell Green Dot cards. You can mail order one from them, however, at a shipping charge of six bucks.
Simon lets you choose exactly how much you want to pre-load onto the card, from $20 to $500. They also offer the option to get a Discover or American Express card instead of VISA. As with the Green Dot card, all models have a 16 digit number, CVV2 checksum and an expiration date so they can be used online as well as at brick-and-mortar stores. The Simon card does require you to give them a name, address and telephone number, but they do not require a Social Security Number like the Green Dot cards do.
The Simon card remains good as long as funds are available on the card. There are no monthly fees, though they do charge a $4 fee each time you want to reload the card.
I feel that the Green Dot cards are a bit of a ripoff, as they are usually kept behind the counter at retail stores, and the packaging doesn’t make clear how many fees they want for continued use or how limited the card is in what you can do with it initially. The Simon card, however, was pleasantly low-hassle and what I think most people will actually want from a prepaid VISA.
