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Are there any "devices" that can be used to make on-line purchases like a credit or debit card but which will never have an attached line of credit? In particular what I want is a card that, when the balance goes down to zero, further transactions will be declined rather than result in an overdraft.

A while back, I asked a few banks about this and they said that their debit cards did this except in the case where I had agreed to a contract allowing some third party (e.g. PayPal, NetFlix) to charge my bill on the card. This is a problem for me because this is the exact case I'm wanting such an account for.

  • Why do you want this kind of arrangement? To avoid fraud? To add extra measures to control your spending? To avoid NSF fees? – mbhunter Nov 1 '10 at 21:46
  • @mbhunter: The point is to have a hard limit on my potential liability. Given that I want to use it as way of transferring money rather than as a line of credit (i.e. never allow the balance to exceed what I can pay in cash) the only time the account would go to zero is from fraud or accounting/billing errors. In either case, I'd rather the debate happen /before/ the money gets transfered rather than after. – BCS Nov 2 '10 at 4:07
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    If you want a hard limit on liability, use a credit card and your head to track your spending. Certainly less of a hassle than juggling gift cards or whatever. – duffbeer703 Nov 4 '10 at 21:46
  • @duffbeef703: that works as long as the person on the other end does there job correctly. The problem comes up where I want to use a service that only accepts payment via credit-card with a user agreement that amounts to "we'll charge your card whatever we decide you owe us." Very rarely they muck it up and end up charging thousands of dollars. And the fun thing is that with that user agreement, it's not even fraud. There are many things I'll (reluctantly) forgo before allowing that to be even possible. – BCS Nov 4 '10 at 23:37
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This arrangement might be a bit of a pain, but what about Visa gift card(s)?

The transfer of money just doesn't happen if the money isn't already on the card.

See here.

  • That could work, if the card can be reloaded (I suspect PayPal wouldn't like me changing the credit card number every other month :) – BCS Nov 2 '10 at 14:25
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    When I last looked at using Visa gift cards for this purpose, the fees (both for purchase and retention) on visa gift cards were onerous to the point of making them not worth while. – Alex B Nov 2 '10 at 21:03
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We have a pre-paid mastercard. This will only allow the spending up to the amount already paid into the card account. Visa Electron is a bank account linked debit card that will not allow the account to go overdrawn but this card type is getting quite rare.

  • Just checking, but that does work in the US? (That site seems to assume UK.) – BCS Nov 2 '10 at 14:28
  • This is a UK product but surely with such a popular Mastercard will have similar products in foreign parts of the world. – uɐɪ Nov 2 '10 at 14:57
  • For all I know, it exists as a result of some UK specific banking laws. I hope not, but I could be so unlucky. – BCS Nov 2 '10 at 15:26
  • There are similar mastercards over the rest of the EU. It is the only way to book flights on Ryanair without incurring a credit card surcharge fee. – uɐɪ Nov 2 '10 at 15:54
  • Mastercard has pre-paid cards in the US as well: mastercard.com/us/personal/en/aboutourcards/prepaid/… – Eclipse Nov 2 '10 at 18:45
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I think what you are looking for is a secured credit card. They are mostly used by people who have ruined their credit and want to rebuild it, but it might also serve your purpose.

Essentially you deposit some money in an account and the credit card can be used up to the amount left in the account. Each month when you pay the bill, it resets the balance that you can charge.

Also, many credit card providers also offer "disposable" or "one use" credit card numbers for the express purpose of using it online. It still gets charged against your regular account, but you get a separate number that can only be used for up to X dollars of transactions.

  • I wonder if the first would have any credit rating implications. As for the second, one-time cards wouldn't work because for those, I can just cry fraud and most credit cards will jump real fast. I'm worried about services that require you to set up automatic monthly payments with a user agreement that more or less says you owe them whatever they say you do. – BCS Nov 2 '10 at 4:11
  • Many institutions still use the same financial platform to process transactions and it still has a limit, liability, and could go over the proposed amount. I worked at a Credit Union that use to regularly charge-off over $100,000/year in "loss" from secured credit cards, where they exceeded the amount in the account, typically by returned fees, gym memberships, etc. that have special non-purchase type transactions and/or special vendor/payee relationships. – BrownRedHawk Sep 28 '15 at 15:25
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Having worked at a financial institution, this is a somewhat simple, two-part solution.

1) The lendor/vendor/financial institution simply turns off the overdraft protection in all its forms. If no funds are available at a pin-presented transaction, the payment is simply declined. No fee, no overdraft, no mess.

2) This sticking point for a recurring transaction, is that merchants such as Netflix, Gold's Gym etc, CHOOSE to allow payments like this, BECAUSE they are assured they are going to get paid by the financial institution. It prevents them from having issues.

Only a gift card will not cost you more money than you put in, BUT I know of several institutions, that too many non-payment periods can cause them to cease doing business with you in the future.

TL:DR/IMO If you don't want to pay more than you have, gift cards are the way to go. You can re-charge them whenever you choose, and should you run into a problem, simply buy a new card and start over.

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