Does a Prepaid Visa Show on a Credit Report?

Companies offering prepaid Visa cards often market the cards as prepaid credit cards. The marketing may attract people who lack the credit qualifications for a regular credit card. However, a prepaid Visa is merely a debit card. The cards do not offer a line of credit, and do not show up on credit reports. On its website, at the time of publication, Visa makes a distinction between "prepaid and gift cards" and credit cards. Visa points out that some of its regular Visa credit cards are useful for establishing credit, but it does not list that as a feature of its prepaid cards.

Considerations

Standard Visa credit cards offered by banks and credit unions usually require an application followed by a credit check. Upon approval the bank issues the card along with a credit line ranging from a few hundred dollars to more than $10,000, depending on the applicant's income, credit history and credit score. Banks report certain information about the account to major credit bureaus such as Experian, TransUnion and Equifax. Each month the credit bureaus receive information about the current credit limit on bank-issued Visa cards, along with the balance and minimum monthly payment, if any. Companies offering prepaid Visa cards report no information on such accounts to credit bureaus.

Confirmation

People considering a Visa card to build their credit should contact the issuer to ask if the company reports information to credit bureaus about the card. The absence of a credit line makes a prepaid Visa card an excellent substitute for cash or checks, but it is not helpful for determining how a person handles credit.

Drawbacks

Prepaid Visa cards do not offer other important features that are standard with bank-issued Visa cards. For example, hotels and rental car companies may accept prepaid Visa cards for payment. However, in addition to the cost of the rental car or hotel room the rental car company or hotel may place a hold on a portion of the balance on the prepaid Visa. The amount could total hundreds of dollars and remain unavailable to the owner of the card for days after the car rental or hotel stay. Credit-authorization holds are also possible on regular Visa credit cards, but the hold is against the credit line on the card.

Alternatives

A secured Visa credit card is a better option for people needing a card to build credit. Some banks and credit unions offer secured Visas, which require a deposit to a savings account. The amount on deposit usually becomes the credit limit. The cards look and work just like regular bank-issued Visa cards, and banks report information about the account each month to the credit bureaus.