Anonymous prepaid credit cards provide cardholders with a higher level of privacy, but not complete confidentiality. Through the Patriot Act, the federal government requires all credit card issuers to collect an applicant's social security number. Most issuers, however, also collect an applicant's mailing address, email address, telephone number and date of birth. Therefore, even though your use of the card is anonymous, a record of your ownership of it still exists.
How Anonymous Prepaid Credit Cards Work
Although called "credit cards," anonymous credit cards are more akin to debit cards. This resemblance derives from the fact that the card's credit limit is not established by the issuing bank, but instead by the cardholder through the amount of money they deposit into the card's account. The holder's spending is restricted to the amount of deposited funds.
Cardholders are generally not limited in the number of times they can add funds to the card in a month as long as the cards are reloadable, but are limited in the amount of money they can place on the card. For example, some issuers only allow holders to deposit $2,500 onto their card. When the card's funds run out or become low, the holder can usually reload it by making another deposit, provided that the deposited amount does not exceed the maximum monthly limit. However, some cards cannot be reloaded, requiring holders to purchase a new card.
Prepaid credit cards are sold at Wal-Mart, Rite-Aid and Western Union and online. Cards affiliated with a major credit company, such as Visa or MasterCard, can be used at any national or international retailer that accepts the card. An issuer may claim that their prepaid card can be used online, but this is not always the case for cards not affiliated with a major bank.
Virtual anonymous credit cards are also available. With these cards, holders are provided with an account number, but do not receive an actual credit card. Virtual anonymous credit cards can only be used online.
Whether tangible or virtual, every prepaid card requires submission of an application. Although short, these applications require an applicant to provide personal information such as their social security number, date of birth and address. Most issuers promise instant approval for online applications, but receipt of the actual card, if any, can take up to a week.
The Anonymity of Anonymous Cards
Because they operate like a debit card, anonymous prepaid credit cards can be more private than traditional credit cards. These cards do not record a cardholder's purchase or payment history and are generally not reported to credit bureaus. While this means that a cardholder's personal information is not shared, the information is still gathered and affiliated with the card by a third party: the issuing company. However, some issuers automatically report regular payments of rent and utilities to the credit reporting agencies. This reduces the card's privacy, but may benefit holders wanting to repair their credit report and score.
The only type of completely anonymous card is a gift card purchased with cash. This type of purchase requires no release of personal information making it impossible to trace the card's purchaser, recipient, if any, or usage. The drawback to this type of card is that its use might be limited to a particular store. Gift cards affiliated with a major bank are similar to debit cards and might avoid the problem of limited use.
Benefits and Drawbacks of Anonymous Cards
Prepaid credit cards have no overdraft fees, can be used for cash withdrawals at ATMs, protect holders against fraud and allow holders to pay bills online. Additionally, despite collecting a Social Security number, most issuers do not run a credit check, allowing individuals with poor or no credit to obtain a credit card.
The increased level of privacy prepaid cards provide, however, comes with a cost. Because issuers will not receive any interest income from the card's use they usually charge high fees. Monthly use, transaction and reloading fees between $30-100 are common.
Anonymous Cards and You
Prepaid anonymous credit cards offer few benefits not included in a basic checking or savings account at a financial institution, particularly when their use is not reported to the three credit reporting agencies. The amount of privacy they provide is not necessarily extensive. In many cases a bank-affiliated debit card can be a cheaper option.
