Help Me Find a Pseudo-Card!
August 6, 2007 8:21 PM   Subscribe

What's the best way for me to buy things on websites that require a credit card without using a "real" card?

So I'm about to go into college, which means that I won't be at home and easily able to ask my parents for permission to use their card. I've always paid for my own online purchases, but when sites require use of a credit card, I use theirs and just pay them back for it.

I'd like the ability to buy things online with a "credit card" that really isn't a credit card--something with an account that I can add money to would be a great solution, and if the card will work with PayPal, that'd be even better--I think they require accounts to have a credit card as a "back up funding source".

I realize that a real card would work in this situation, but I'd like to avoid it if possible just because I don't want to risk not sending a payment in on time or something like that--I'm a very punctual person, but if there's any way I can avoid the risk, I'd be really happy. If you want to suggest I use a real card though, feel free to say so, but please give me a reason or two why that's the only viable solution in your mind.

So, short version: I need something like a prepaid card that I can use as a credit card online, preferably with PayPal as well for a backup funding source. I need to be able to add money to the card at my leisure, and somehow put money onto it as I need to. If a real credit card really is my only option for this, please explain why.

posted by DMan to Work & Money (19 answers total) 4 users marked this as a favorite
You can get pre-paid cards that work pretty much like a store gift card, except you use them as a Visa, MasterCard. AmEx, etc.

e.g. You add $500 to the card and then you can spend it until the $500 is gone.

There's a fee when you purchase the card and a smaller fee each time you add more money to it.
posted by winston at 8:28 PM on August 6, 2007

Best answer: PayPal offers a virtual debit card, and it works extremely well. It's basically a little app that sits in your system tray. Anytime you need to make an online purchase, click on the app and it will generate a virtual Mastercard number with security code and expiration date (usually a month or two later). Those items along with your billing address let you use the virtual debit card pretty much anywhere real credit cards are required.

Once you buy something, PayPal deducts the charge after a hold process from your PayPal balance, which of course can be funded via your checking account.

I do not think PayPal requires a "real" credit card to open an account, fund it, or to make purchases with your balance or the virtual debit card.

There is some sort of daily limit on the $ amount you can charge on the virtual debit card, but they'll let you change it if you contact support I think.

And, oh yeah, there's no fee, sweet.
posted by superfem at 8:30 PM on August 6, 2007 [2 favorites]

A debit card linked to your bank account will do everything you want to do. PayPal will work fine with a debit card, and you can link it to your checking account. PayPal actually seems to prefer your checking account as a funding source. I'm sure there are lots of banks in your area that offer free debit cards, but should have info on lots of online accounts.
posted by Yorrick at 8:31 PM on August 6, 2007

Doesn't a regular debit card do this? Most checking accounts, including student/college checking accounts, give you a debit card that's like a credit card, but directly linked to the funds in your checking account. It is sometimes called a check card too. It also serves as an ATM card.

Info from Visa on check/debit cards.

p.s. I wouldn't bother applying through the link, you can just get one set up through your checking account instead
posted by ml98tu at 8:49 PM on August 6, 2007

Get a Visa Gift Card.
posted by HotPatatta at 9:03 PM on August 6, 2007

If you do go the debit card route, be absolutely sure that your bank offers good fraud protection. Unlike credit cards, there are no laws requiring the bank give you your money back if someone steals your card number and cleans you out. Most will, but some take a very long time.

Since you're going to be in college, you should apply for something like the Citi mtvU card or some other student oriented credit card that offers rewards. You will have good protection against fraud (100% on most cards, these days, which is better than the $50 max legal requirement) and get rebates for the money you spend.

The key is to not be like so many who run up large amounts of credit card debt. Use it responsibly and you will be rewarded with good credit, rewards, and fraud protection. Use it unwisely and you will be punished with massive interest charges at best and a difficult debt load and/or bankruptcy at worst. :(

My SO ran up somewhere in the neighborhood of $30k in credit card debt. (yes, they will let you go that wild) and only recently, several years after graduating, through much effort and reshuffling of debt to get her credit score up has she been able to get enough low APR offers to get the interest charges reasonable enough to make decent headway on paying it off.

Believe me, that's not a game you want to play. Her friends who didn't run up massive credit card debt have a much, much easier time of it to say the least.
posted by wierdo at 9:27 PM on August 6, 2007

Wierdo is incorrect. Federal law does require banks to limit a consumer's financial liability for reported theft. Liability is limited to $50 if a stolen debit card is reported within two business days after discovery of the theft or unauthorized use. If you make a report within 60 days of receiving a bank statement showing unauthorized use of your card, your liability is limited to $500. However, the bank may delay returning the funds for two to three weeks in order to give them time to conduct an investigation to ensure that a theft has actually occurred, to make sure that you're not trying to steal money from them (since unlike with credit cards, they're giving you access to cash instead of simply canceling a debt you owe them). Those are the major differences between debit and credit card protection under federal law. Many banks go beyond what is required by law and limit liability further or guarantee a faster return of funds than is legally mandated.
posted by decathecting at 9:55 PM on August 6, 2007 [1 favorite]

The other option is to get an actual credit card from your particular bank, which gives you a variety of benefits that don't necessarily accrue with some other options (i.e. warranty extension, loss insurance, etc.), if and only if your bank offers the ability to automatically pay your balance from your account. If you always ensure that you are not spending more than you have, you won't need to worry about missing any payments.
posted by birdsquared at 10:30 PM on August 6, 2007

Wait until you go to school. See if there is a school Credit Union for student accounts. Open an account, get the ATM/debit card, apply for the Credit card and keep up with any payments.

Credit cards still have some benefits, (try renting a car with a debit card and see how much hassle it is...). Plus a bit better fraud protection, and such things as cash back and airline miles for purchases...

The big point is to try and go through your campus Credit Union. Credit Unions tend to have better rates and packages than your regular run-of-the-mill banking institutions. Get a Credit Union credit card with a low limit that is tied to your account with automatic billing just like a debit card... Don't abuse it. But a real 'credit card' is much more handy than a 'debit card'.

I recently spent like an hour at a rental car counter bitching and complaining that they let me buy/reserve a car over the internet with a 'debit card' but then they balked when I didn't have a real 'credit card' to finalize the transaction... I'm applying for my 'credit card' for the first time in ten years or so just to get around such nonsense...
posted by zengargoyle at 11:07 PM on August 6, 2007

Per your question, I would like to recommend that you get an actual credit card. Two reasons:

1) You will almost certainly have to do it eventually, and I think the sooner you do it the better. You will have less major/weighty purchases now than you probably will once you graduate college, so it's a better time to get used to using it. Plus your parents will probably be more helpful in the process the younger you are.

2) Also, your credit score is calculated in part based on how long the accounts have been open, so the sooner you open a card, the more it will help you later.

If you're worried about the temptation, don't put it in your wallet, just leave it in a drawer in your desk for occasional online purchases.
posted by andoatnp at 11:10 PM on August 6, 2007

If I were you, I'd just suck it up and get a credit card. You need to start building your credit. When you want to rent an apartment, buy a car, get a cell phone, and get lots of other things, a credit check will need to be done. You really do need to have a credit history. However, if you think you might miss payments, don't get a real credit card. It's really not hard to be punctual, though. With online banking, you can check your credit card balance everyday and even pay your credit card balance everyday (if you so desire).
posted by HotPatatta at 11:39 PM on August 6, 2007

I say bah to "you need to build credit" but my position on consumer debt is clear from my past answers.

Several banks have added support for loadable cards precisely to offer this kind of functionality to kids heading off to school. USAA, if your parents happen to be vets, has this at zero cost. Happily they offer a comparison chart to other companies so I can list a few more for you:

Wachovia Visa Buxx
Allow Card

According to their chart the Wachovia is the best non-USAA option, with a $12 one-time setup fee and no inactivity charges and free loading if done from a Wachovia account.

All that said, if you just need a CC that you load an account with then why not a standard checking account? Look for a low cost credit union you can join. It's pretty rare anymore that a bank doesn't offer a debit card tied to your checking account.
posted by phearlez at 7:25 AM on August 7, 2007

This is what i did when i started college.

Open a bank account, ask your parents to put 50-100 bucks as a min balance and you will get a visa debit/credit card. It is safe because you wont overspend than what you have in the bank( kind of prepaid card).

Debitcard can be used everywhere credit card can ( Usually Visa/ Mastercard). I can refer you to bank of america, excellent customer service and they have atms every 5 miles.
posted by radsqd at 9:27 AM on August 7, 2007

btw as soon as a freshman, in college fairs there will bunch of credit card companies and banks trying to sell you their product with a gift (mostly t-shirts, ipod( keybank)).

DO not fall for that, next thing you know you have bunch of credit cards and accounts and your way over your head
posted by radsqd at 9:29 AM on August 7, 2007

try renting a car with a debit card and see how much hassle it is...

Why would this be? Can they charge you for late return/unclean car on a credit card without your explicit approval--but a debit card would require your explicit approval at the time of billing you for those things? Or is it something else?
posted by Martin E. at 10:58 AM on August 7, 2007

Get a credit card - reason? It is called growing up - being responsible for managing your own finances, making payements on time might as well get in the habit now...don't agree with those who say that you'll automatically start overspending - I didn't.
posted by koahiatamadl at 12:16 PM on August 7, 2007

Best answer: I was wrong about the legal limits of a bank's liability in the case of a debit card. That doesn't change that a) you have to report it within 60 days to get any of it back, and b) even if you do, if they argue that you knew for more than two days that the card was missing you're out $500, not $50 (or nothing).

Martin E: They presume that you may have little money above and beyond the charge for the rental in your bank account, but that you are more likely to have a credit line in excess of those charges.

Many rental agencies no longer accept debit cards for a guarantee at the time of rental, only accepting them for payment after the rental is concluded.

To the OP: Don't let the naysayers keep you from getting a credit card, and sure as hell don't let them tell you that building a good credit history is anything but excellent for you in the future. While it's better to have money in the bank for emergencies, in the event that you either don't have access to that money or have tapped out that money, it's an excellent thing to have low or no interest credit available to you thanks to your previous good behavior for things like auto repair that won't leave you unable to pay the debt but would be impossible to cover for whatever reason.

What you should be wary of is using a high interest card for something like that.

You should deal with banks like Chase (although I hate them) and Bank of America who will auto-debit your minimum payment from your checking account each month. This ensures that you will not be able to ruin your credit rating, except by using too much of your available credit. Luckily, using too much credit is easily fixed. Pay down the debt. Missed payments are not so easy to fix.

My former roommate had to get a cosigner for his home loan and pay a higher interest rate strictly because he thought the way that some of the answerers do, that credit was evil and he shouldn't have a credit card. All he had on his credit history were two car loans (one of which required he put up most of the value of the loan in collateral, and the other which required a cosigner). Now he has a couple of credit cards and hopefully soon he will have a very good credit score, once the cards age for a while.

As I mentioned above, the way to avoid the risk of not sending a payment in on time is to have them deduct the payment from your checking account automatically each month. Then all you have to do is keep your checking account balance high enough to cover the monthly minimum payment. No thought required.
posted by wierdo at 2:03 PM on August 7, 2007

Response by poster: Thanks for all of the responses, looks like I have several options. I like the PayPal card idea especially.

Question about getting a real card/establishing a good score: do I have to maintain a running balance in order for my credit score to improve? As in, is it enough to just get the card, or do I have to charge things to it (and subsequently pay off the balance, of course)?
posted by DMan at 4:21 PM on August 7, 2007

Just having the card on your credit report for a long period of time will boost your credit score down the road, regardless of the activity on it. In addition, your credit score will take a short-term dip whenever you apply for new credit, so if you do that now, you'll be fully recovered from the short-term decrease when you are at a point where the credit score is important.

I have seen some people suggest that having a small balance is better than having none, but if you're not comfortable with that, you'll get some benefit just from having the card even if you don't use it at all, or use it once in a very long while and then pay it off right away.
posted by Stacey at 5:27 PM on August 7, 2007

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