Pre-paid credit cards sound good, but they are really quite a hassle. These are often given as a gift or a reward that comes in the form of a one-use credit card. It has already been loaded with a specific amount of money. You just spend it and then toss it. It should be easy, right?

The problem comes from trying to make a purchase that will use up all the money. One ideal way to spend it would be to use it at a restaurant. The servers are already used to splitting a tab up on multiple credit cards, so in theory you should be able to use up the amount on the gift card and then put the rest of the balance on your own card.

Unfortunately, you can’t do this. When a restaurant charges a credit card, they automatically authorize 20% more than the actual bill to make sure you will be able to cover the tip. Even though the final settlement charge will be lower, the gift card processor doesn’t know this and will reject the charge for being over the amount of money on the bill.

The alternative is to split the charge up at a retail store, putting the first chunk of money on the gift card and then the balance on the second card. Major retailers like Target or Best Buy can handle this, but it will sometimes throw smaller businesses for a bit of a loop, costing extra time and confusion. Also, I have no idea what happens if you try to return something bought on two cards like this, where they normally credit back the card you used for the purchase.

I’m pretty sure some of this hassle is intentional. I recently received a $10 rewards card from AT&T, and I am sure their goal is for me to never spend it. I received it as an incentive to switch to paperless billing. Lots of companies try to get me to switch, but I always refuse to do because the company touts it as good for the environment when really they are just trying to save on postage. In this case, I relented since they were actually willing to share some of the savings with me.

It took two months for them to finally approve the reward (they wanted to make sure I didn’t turn it back off), then I had to register again to process the reward. When it finally arrived a few weeks later, it came in the form of a pre-paid credit card for $10 that expires in just two months. I’m convinced that they hope a non-trivial portion of people who receive the reward will forget it about it or not go through the hassle before the two months are over, in which case they get to keep the money.

A $10 pre-paid credit card that expires in two months is probably designed to expire before you can spend it

Long ago, someone suggested to me a very simple solution to easily spend pre-paid credit cards – convert them to Amazon gift certificates. Specify yourself as the recipient, and you can do it for the exact amount available on the card.  You will now have a credit on your account that you can use to buy anything you want. The money will not expire, so you can do it the moment you receive the card and get around to spending it later. Returns are easy as they ever were.

So, as soon as I received the card, I converted it and then handed it to my three-year-old son as a “pretend” credit card for his toy wallet.