Vanilla Prepaid Mastercard and Microsoft rips me off!

You need to register your card online at www.vanillamastercard.com BEFORE you can use it for online purchases, eventhough it'll work at the store without registration, it won't work online without doing this, enhanced security...:-)

I did register it like 2 weeks ago, but will prepaid credit card work though for purchasing?

It's been awhile, but I believe that I have used them on XBOXLive before, try calling 1-800-4MY-XBOX before you try again for you're being charged a $1 fee everytime that you attempt this transaction, that could be an automatic fee by the credit card so talk to support before trying again...:-)

Why not just set up a paypal account and link it to your gamertag?

Shoppers Drug Mart doesn't charge taxes on their cards... that's where I go. I used to buy online (with a credit card) but, have since stopped... I was paying taxes when purchasing online.

I think. onyx62is, the reason most, myself included, are hesitant to link a paypal account is that you are, in fact, also linking your bank account when you do this, prepaid cards is the safest way to purchase points on XBOXLive...:-)

Funny, really. I recently got a 'Vanilla Mastercard' as a gift, and after using it online (didn't have to register), I figured I'd use the leftover balance for MS points... didn't work. I registered it... still didn't work, and it got a $1 charge from Microsoft. I have to say, that's pretty weak.
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OP: I'd suggest not trying it again. Go with prepaid MS points cards.

[quote user="onyx62is"]

Why not just set up a paypal account and link it to your gamertag?

[/quote]

Could be wrong, but doesn't this require a credit card be linked to the Paypal account? The OP may not have one.

Best way to use Paypal is to have a bank account linked to it that you keep nearly empty (with just enough cash in it to keep it open) and put the needed cash into when you need it then do a transfer through Paypal. At least its the safest way to use Paypal without wondering if someone will get into your bank account and empty it.

The trouble with that is that it's nearly impossible to keep a bank account nowadays without having atleast $10 taken off monthly for service charges (whether you use it or not), the only accounts I know of that don't do this are kid's accounts which probably can't be linked to PayPal, anyway you look at it, the prepaid cards are the best way to go...:-)

Most banks provide savings accounts which let you keep low amounts in them without having it closed or being charged fees. At least that's what i did and usually i keep around 1$ in it but i do keep it activeby using it oftenly.