Imagine my frustration - I had found an old Beatles CD I had been looking for in an online auction site but my prepaid gift card was being refused as payment. I knew I had exactly enough money left on the prepaid debit style card for the LP and shipping because I had just checked my balance - what could be the problem? To be sure, I dialed the 800 number on the back of the prepaid gift card again and punched in the card numbers. The automated voice told me that my prepaid balance was now $2.00 less than it had been just minutes before, and I had not even used the card!

I went to the website of the prepaid credit card and entered my account number. At least I could now clearly see why my balance was so much lower. I was charged $1.00 for the failed online purchase. And there was the extra $1.00 charge for the "toll free" phone call I had just made to check the balance. OK, so I am responsible for knowing the rules, but who would have thought I would be charged for making the call to check my balance?

I know prepaid credit cards are popular. In fact, in 2006 around $24.81 billion was spent on these prepaid credit and gift cards. Well, a little research made it clear to me why retailers and credit card companies like these prepaid credit cards, too. Just like they got me with fees, they get the millions of others in the same way. In addition, somewhere between 6% and 25% of the value of the cards is never redeemed. That means the card companies collect between $1.48 and $6.2 billion! That is because if you have, say $5.00 remaining on your card and you make a $15.00 purchase, with many cards, you cannot pay with the $5.00 on the card and pay the rest with cash. So you have to "reload" the card. Well, when are you going to buy something that costs exactly what is on your card? So some balance remains and never gets spent.

So what do you need to do? Be sure to read the fine print. Fees can vary greatly and in general, prepaid gift cards from retailers, hotels and restaurants are the best value in terms of fees, but then you are restricted to purchases from that particular business. Prepaid credit cards from the card companies are generally different and you can expect to pay a fee right off the top to cover "processing".

Fees can then be charged for simply using the card to buy something, to check your balance, for refused transactions (like me), for registering the card with a name and address so it can be used online, expensive monthly and/or annual maintenance fees, the list goes on.

If you do have a prepaid credit card that has lots of these fees, what are you going to do? You cannot use the remaining balance on your card if it is less than what you owe. You could pay another fee. But don't call to get your balance either. You could be charged again! Try one of the retailer prepaid cards to avoid these unreasonable fees.

One place you may want to check for a good deal on prepaid credit cards is your local bank. They often have some of the best deals and least restrictive rules for prepaid cards that will not limit you to a single retailer. Like all cards, the law requires all prepaid credit and gift card distributors to clearly explain the fees and charges. Just be sure to take the time to compare cards and you could save yourself a lot of money and frustration. I never did get that Beatles CD, but I learned a big lesson and used the remaining balance of my prepaid credit card on a U2 CD instead.