Increasingly, travel advisers are writing that prepaid cards, sometimes known as “prepaid debit cards” or “prepaid credit cards” are better for traveling than traditional credit cards. Though there is some merit to this claim, we’ve decided to take a closer look at prepaid cards to determine if these cards are all they’re made out to be.

Claim #1) Prepaid cards are as convenient as credit cards.

True. Any prepaid card carrying the Visa or MasterCard logo can be used anywhere a credit card with the Visa and MasterCard logo can be used.

Claim #2) Since these cards often have a PIN, they are safer than credit cards.

It depends. Many consumer advocates now encourage debit card users to use their debit card like a credit card rather than use their PIN. This is because too many scam artists have perfected the art of stealing PINs. With your PIN a thief can withdraw cash at will. Prepaid cards will at least give you the option to use a PIN to make purchases.

Claim #3) Prepaid cards are safer because they contain only as much value as you put on them.

Not really. Credit cards are also limited by the credit limit. The spending limit isn’t really an issue since both have a maximum theft liability.

Claim #4) Prepaid cards have a $0 liability for theft or loss.

True. Be sure to read the fine print for your specific prepaid cards and credit cards, but a lot of credit cards also have a $0 loss or theft policy. The maximum amount you can be liable for with a credit card is $50. So this difference is negligible or even non-existent.

Claim #5) Prepaid card accounts are easier to open and you don’t need good credit to get one.

Very true. If you’re having trouble getting a credit card for travel, prepaid cards will give you many of the same advantages of credit cards even without the credit rating required to get a good credit card.

Our conclusion is that the differences between credit cards and prepaid cards are minimal. Both have many of the same pitfalls. Credit cards often have better travel benefits and rewards options, but they require a good credit rating to get. Prepaid cards have definite advantages for those who can’t get a credit card or who tend to overspend while traveling and want to force themselves to a predetermined spending limit. That said, you wouldn’t want to strand yourself in the middle of nowhere because of a self-set spending limit. Prepaid cards often have debit card style fees for using ATMs, so investigate these carefully.

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