Friday, January 16, 2009

Prepaid VISA Cards

For Christmas I was given a couple of prepaid VISA cards. I found that I could order stuff online and pay for it with these cards, rather than my debit card. The advantage to this is tremendous.

Frequently when you order something and pay with your VISA, you are somehow giving the company permission to send you more product periodically and for them to thus help themselves to another chunk of money out of your account without warning. I had this happen to me several times, which is why I now go over my bank statements with a fine tooth comb.

One of the offenders was Lauren Bacall cosmetics. They send you all kinds of shit monthly once you’ve ordered their main item, the round makeup set compact (which in all fairness I have to add is a great product!)

Other companies that have continued to dip into my bank account once I’ve ordered from them are travel clubs, magazine subscriptions, gourmet food orders, credit report agencies, etc. It’s very insidious and sneaky, many many times even after reading the fine print I didn’t realize that this was an ongoing thing that I was agreeing to.

One of the ways they get you is to offer you something amazing … a free airplane ticket for trying their travel club, for example. You can cancel within 30 days without having to give back the ticket … that sort of thing. I stumbled into that by opening a bank account once. The travel club was presented as a “free service” that came with the account.

By paying for anything you order online with a prepaid VISA card, you aren’t allowing anyone access to your bank account or line of credit. All you are risking is the $100 (or whatever amount) that you used to buy the card initially. From now on, I intend to buy a $100 VISA card when I get paid once a month and use it for all online ordering.

Another thing I do is to once a year destroy my old ATM debit VISA card and order a new one with a new account number. Even going over my statements carefully, you can miss things plus it helps to clean out the cobwebs and avoid identity theft.

Another way to use prepaid cards is as a budgeting tool, especially for those of us who are paid once a month. Rather than keep envelopes of cash in your purse - it's too easy to grab from envelopes for impulse buying - instead I'll put $20 on my Starbucks card, buy a gas card to the station I frequent most often, buy a Trader Joe's card to use throughout the month. It's the same thing as buying prepaid cell phones. When the card is used up, no more luxury items until next month.

My friend Breann has a $500 limit on a visa card. Once that card is used up, that's it. That's her spending money for the month. A clever idea I haven't tried yet.

1 comment:

Di said...

The Manilow VISA card has a feature called "shopsafe," that allows you to generate a special card number with a preset expiration date and dollar limit. It all gets charged to the main card, but you are not giving out your "real" credit card number. Kind of a similar idea.