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The words "free" and "prepaid" may light up your eyes, and it's no wonder that these new types of credit cards are fast becoming one of the hot new items in the credit card world. They give you instant approval to spend. They don't have a long drawn-out application process. And you don't even need a bank account to get one.

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1. There Are No Free Lunches

Prepaid cards are electronic cards which allow card holders to access funds deposited to an account. A prepaid card can be used to withdraw money or pay for goods and services. Unlike a credit card, which extends a line of credit, prepaid cards are more similar to debit cards. Prepaid card holders can only spend the money they load on the card. Since no credit is extended to prepaid card holders, interest and overdraft fees are avoided.

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As the saying goes, though, if it sounds too good to be true, then it probably is. In this case, this saying is only partially true. Hence, here's our first tip for those shopping for prepaid credit cards-know what you're getting into. Free prepaid credit cards may be the best bet for people who otherwise have trouble getting traditional cards, either because they have bad credit or no credit. They act as both a credit card and a debit card. But they aren't free. They have a downside-these cards have high fees and penalties.

Money can be loaded on to your prepaid card by cash, bank transfer or even another credit card, and because it is a Visa or MasterCard you can use it anywhere in the world. Prepaid cards generally have the same uses as a credit card, so much so that they are commonly referred to as ‘prepaid credit cards’. However, there is a difference. A prepaid card is completely powered by your cash and therefore the money you have in your prepaid account is the money you have to spend. This means there is no risk of running into debt. There are no credit checks and no interest to pay. Consequently, rather than referring to it as a prepaid credit card, a better description would be a prepaid debit card, a prepaid Visa card or a prepaid MasterCard.

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2. Read the Fine Print

If you think a prepaid credit card is right for, do some research on the different prepaid cards available. You can read reviews of prepaid credit cards, other articles and discuss prepaid cards at the prepaid card forum.

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So before you act on these cards, be sure to check the fine print. Compare your options to find out which has the best rewards program, giving you the best prizes for money spent on the card. Just like credit cards, these prepaid cards allow you to accrue these rewards the more money you add, and take off, the cards.

What is a prepaid credit card You pay in advance to get credit Nope! It's a debit card where you first put money on the card and then can spend only as much as is left on the card. You can shop online, book tickets, do your groceries and withdraw cash with a prepaid credit card. It's really a debit card that works like a credit card. People call them prepaid credit cards because they look like a credit card, act like a credit card and have a visa or mastercard logo on them. Reloadable prepaid credit cards allow you to add money to your card every time you run low.

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3. Compare Fees

: Prepaid Phone Card (calling card) domestic long distance telephone rates on prepaid phone cards, free numbers, by Long Distance POST, LDPost

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On the negative side of things, compare the cards' fees. Some cards may cost upwards of $20 just to start one, plus have monthly maintenance fees and fees to add and withdrawal money. These cards can also have fees to argue a charge, or to get a hard copy of your statement. All this money adds up, even if the fees are only a few bucks. So look for the lowest fees possible.

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4. This Isn't Monopoly Money

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Another tip to consider with prepaid cards is that these may seem like a good way to spend less money than regular cards. After all, the money is already added to the card, so it's OK to spend it, right? However, don't let this attitude lead to overuse of the card, because you'll only end up adding more money, and spending more fees, on the card in the long run.

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5. Look into Special Features

Refinancing With Bad Credit There are some positives to keep your eye out for when shopping for prepaid credit cards. Many of them also offer not only rewards programs, but zero-liability fraud protection, meaning that you aren't responsible for anyone using your card against your permission, or stealing the card and committing credit card fraud.

Home Equity Line Of Credit Joshua Shapiro recommends Find Credit Cards to find a free prepaid credit card.

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