The downsides of using a prepaid card include high fees (activation, monthly, reloading, ATM withdrawal, inactivity fees), limited merchant acceptance, and restricted use in some places like hotels or car rentals. Prepaid cards do not help build or improve credit because they do not report to credit bureaus. They also tend to offer fewer rewards and benefits compared to credit cards, and may have limited integration with accounting tools. Additional issues include restrictions on international use, potential difficulties with reloading funds, and limited consumer protection against fraud and loss. Also, prepaid cards generally do not accrue interest or provide credit lines for unforeseen expenses.
