The other day my friend got an email offer to try American Express' prepaid card, which offers access to American Express benefits with no fees except for ATM withdrawals. Before getting the email, she'd been considering one of the Rush prepaid Visa cards, which may charge fees (monthly fee, requesting a paper statement, bill pay fee, etc.) that vary depending on the services you choose.
So it's a no-brainer right? Who wouldn't want access to Amex benefits (they're the chosen card for U.S. Tennis Open, Tribeca Film Festival and many other exclusive events) and the prestige often associated with the name, even if it's on a prepaid card?
But if you're being offered a prepaid card rather than a credit card, chances are there may be issues with your credit. And if you're having credit issues, then you need to look beneath the surface of these two cards to the one that will be more beneficial in the long run. So that's what I recommended to my friend.
We discovered that despite the fees of the Rush card (which can be mitigated by using it only for essential services) it could actually help build credit in the long run since they'll report bill payments to credit reporting agencies. So the fee could actually be justified. In contrast the Amex prepaid card doesn't monitor or track payments, so it's probably better for people who are seeking the prestige and access that Amex can provide.
Sometimes you have to look deeper than what's presented on the surface.
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