Web Extra: The Real Deal Behind Prepaid Cards

Choosing a credit card is not something you should rush into, but getting one without a bank account or line of credit? What's up with that?

Prepaid debit cards tell you to spend your paycheck with status and style by letting you directly deposit your earnings into a piece of branded plastic. Take the trendy-looking Prepaid Visa RushCard, the brainchild of hip-hop mogul Russell Simmons. Simmons says the product makes you “financially empowered,” and many Americans have bought in, with 1.5 million RushCards issued in the past five years. But these cards may be more financially draining than empowering – carrying costs and transaction fees that add up fast. So before you rush out to get one, know the price you’ll pay for the prepaid life.

Prepaid cards also come with extremely high fees. To get the card in the first place, you have to pay a fee of $19.95 and then for every withdrawal or transaction you make you pay $1 PLUS ATM fees associated with the bank you are withdrawing from.

Prepaid cards in general are marketed to those of us who still believe that everyone has the right to credit, even if you've already destroyed your own. But having credit is a privilege, not a right – and its a privilege you pay for. In some cases such as these, the price is simply too high.

If you're going to get a card to build credit, start instead with a secured card. A secured card is a credit card with a credit line that is built on your initial deposit – your credit is your cash –and these cards build your credit history. And if simply having the ability to plop down plastic is your goal, you're better off with a debit card.

I'm not hating on Russell or RUSH - I'm just telling you what's up.