About Stored Value Credit Cards

Stored value credit cards are cards that are able to serve as credit cards even though they aren't credit cards in the traditional sense. A stored valued credit card is a credit card that can be purchased over the counter, bears a credit card service provider logo, but does not have the same features as a regular credit card. For example, a stored value credit card does not necessarily have monthly statements unless it's for the account from which a temporary credit card has been issued. 

A credit card that has stored value may be sold by a number of different financial institutions, however, if one refers to credit in a broader sense, department store gift cards, prepaid credit cards, service access cards, government issued social assistance or "electronic benefit cards", and employer compensation cards may also be considered stored value credit cards in the sense they have a credit limit. A difference however, is that some of these cards are more like stored value secured credit cards. All these cards have slightly different premises, usability and sources of funding. They all however, "store" value that can be used as credit for the purchase of merchandise or in the redemption of services.

Traditional credit card providers distribute stored credit cards for people who do not want the inconvenience of applying for credit cards and paying monthly bills. These cards can be obtained with a balance by paying the balance amount to the authorized stored credit card distributor. These types of cards may be used in similar ways as traditional credit cards except in instances in which a name is required on a stored value credit card without a name.

Stored value credit cards may be purchased as gifts, and hence are transferable so long as a balance remains on the card and the card can still be registered and/or activated. Stored credit cards may reduce the need for carrying cash and lower risk of theft or loss. The cards may renewed or increased in value by adding funds at any time before the cards expiration date.

Redemption of card value may be restricted to certain locations in the case of department store credit cards. If a new stored credit card is stolen it may be difficult to track the funds without the original receipt and/or card activation number. Stored credit cards do not improve credit ratings and therefore do not have all the advantages of a traditional credit card.

Balances on stored credit cards may not be redeemable for cash and in some cases adding service credits to the card may incur a service fee. The costs associated with using such cards can depend on the issuer's policy and service guidelines in which case reading terms of agreement may be advantageous especially for larger card amounts. The use of stored valued credit cards has become more widespread however legalities associated with use of such cards vary with the type of card.