Why a credit card (including prepaid) is better than a debit card.

Credit cards, even if you do not use them for borrowing, offer far more protection under federal law than debit cards. If you use a credit card to buy something and there is a problem with receiving the proper, functioning item — or the amount charged — there is a form on the back of every bill that tells you how to complain to the credit card company. You must do exactly as they say on the bill (calling does not protect your rights and will probably not result in any action), but if you follow their instructions the credit card company must suspend the amount under dispute and investigate your complaint. Within 30 days they must tell you what they found, or drop the charge from your bill. None of this is true with debit cards which take money directly from your account, just like a check. If there’s a problem, it’s your hunt.

Prepaid cards are a good way for people with poor credit to gain the convenience of a credit card, but most of the prepaid cards we found on the web in a recent search were debit cards. There were a few credit cards, and we advise anyone considering the use of prepaid cards to try to get one of those.

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