Ask Sid: Prepaid Cards vs. Credit Cards

Q. Are prepaid cards better than credit cards?

A. Even with credit card interest rates and penalties rising, a prepaid card is not necessarily the better option. Prepaid cards let you deposit a set amount upfront, and they work much like debit cards. Although they have no interest charges, most include hefty activation, transaction and other fees that could cost more than interest on a reasonable balance. And they don’t offer the same protection against fraud, loss or theft as credit cards. It’s also harder to dispute questionable charges on prepaid cards.

Sid Kirchheimer writes about consumer and health issues.