There is no interest on prepaid credit cards, because the term credit cards is a misnomer, given that these cards function more as debit cards, says CreditCards.com. The user may make purchases against a prepaid fund that has been loaded into the card. The card offers no credit line.
The providers of prepaid credit cards make their profits on fees that are charged for certain services and not on monthly interest fees, according to CreditCards,com. Such fees include monthly usage charges and fees for using automated teller machines for withdrawing cash or checking balances. These prepaid cards are often used by those whose credit rating is too poor to qualify for credit lines.