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Advantages Of A Prepaid Credit Card

Apr 10, 2008
Prepaid credit cards are great for people who want the convenience of a credit card without the risk of unwanted debt. Prepaid credit cards are also for those with poor credit history, no credit history, teenagers or those rebuilding their credit and cannot obtain or want a traditional credit card.

Prepaid means you load money onto your cards before you can spend it. You can deposit money by bank transfer, direct debit or other arrangements as detailed by each provider. When you make a purchase, the amount is deducted from your card. You can only spend what you deposit therefore no credit no debt.

You can use your prepaid credit card for those occasions where cash is not accepted like buying online, ordering though the mail or paying bills over the phone. The cards can be used anywhere normal MasterCard or Visa cards are accepted like restaurants, gas stations, movies and shopping.

Prepaid credit cards are instantly approved as there are no risks to the companies. There is no income verification, credit history checks, no deposits required and you do not need to open a bank account. You will be required to transfer some money to activate the card.

Since prepaid credit cards can withdraw cash from ATM's, you can safely carry less cash. Remember prepaid cards are interest free and that include cash withdraws.

There will be some costs in owning a prepaid credit card. Most companies will require a small monthly fee or charge a cost per transaction. Depending on how often you use the card will determine the best method for you. If you make recurring direct deposits, these fee maybe waived. Most of the cards will have a maximum limit on the amount loaded onto the card.

Not all prepaid credit card offers will report you transaction to credit bureaus. So if you are looking to rebuild or starting your credit history; look for card that report the cardholder's transactions to credit bureaus like Equifax, Trans Union or Experian.

With traditional credit cards, it is easy to loss track of your spending and build-up large debt, because the temptation is to just pay the minimum amount and worry about the debt until next month. With a prepaid credit card you must control your spending since you must repay the balance if you wish to continue to use the card.

Prepaid credit cards are the ideal solution for children who are turning to teenagers and heading to colleges which will teach them financial responsibility at an early age. Statistics have shown that students usually incur huge credit card debts by the time they are finishing college because of poor financial discipline when they get and use unsecured credit cards.

While most prepaid credit card offer no extra benefits some companies offer affiliate programs, sweepstake change draws, rebate programs, shopping discounts or credit report facilities. Compare the different prepaid credit cards offers available and find the right credit card for you.
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