Prepaid Credit Cards

What are prepaid credit cards?

Basically they are credit cards that have been paid for in advance. For example, you may have prepaid your credit card with, say $500. You will then be able to use your prepaid card, just like a credit card up to the $500 limit. And you can prepay at any time.

As with most things there are pros and cons for these cards.

For people who have a poor credit rating these cards can be very useful, because typically they will have a tough time getting a regular credit card because of their poor credit history. But a prepaid card bypasses this problem, because you pay in advance.

And for some people this prepaid card will make life so much easier. To purchase anything online, you need a credit card, and these prepaid credit cards would enable you to do that. The cards look like regular credit cards, and can be used in the same way.

In this high-tech era of computers and machines, the purchasing power of people is mostly based on credit. Nowadays, credit cards are almost indispensable in almost any business transaction. For example, it is very difficult to purchase anything online without a credit card.

People who have a poor credit history though, will have a hard time getting or renewing their credit cards. This is where prepaid credit becomes useful.

There are lenders that offer prepaid MasterCards and/or prepaid Visa Cards. Both these cards can be used like a regular credit card. It is even hard to distinguish which card is prepaid or not, by simply looking at it or even using it.

This is basically how prepaid credit cards work. When an account is opened, the card should be “pre-loaded” with cash up-front. This is like paying for a pre-paid calling card.
Prepaid MasterCards or Visas can be used anywhere as long as these cards are accepted.

Advantages of Prepaid Credit Cards :

1. Prepaid credit cards can be easily purchased online or in local retail stores, and they do not require any credit check or proof of income, because you pay in advance. The only thing to do is to fill out an application, pay a small for set-up fee for the account and prepay the card with cash. The amount of cash paid will be the “credit limit”.
   
2. There are no interest charges, because if there is no money in the account you cannot use the prepaid credit card.
   
3. There are no credit or financial problems with Prepaid Credit Cards.
   
4. Prepaid cards can be used almost anywhere.

Disadvantages of Prepaid Credit Cards:

1. There is usually a set-up fee of 5 to 50 dollars when an account is opened. Then another fee of $5 or more is paid every time more money is loaded onto the card. You need to check this amount before you go ahead with this card. This is different to regular credit cards which do not usually charge a set-up fee but they do often have annual fees.
   
2. Cash is needed up front before any purchase can be made with a prepaid credit card.
   This can be an advantage for some, since it can help avoid impulse spending.

Conclusion:

It seems to me that prepaid credit cards have the advantage of making sure you have funds available before you purchase anything, and this will be a big help to those who have poor credit ratings. It will enable these people to purchase items they need online, but keep their spending under control because of the limit.

So if you decide that prepaid credit cards are the way to go, then you need to do some research to find the prepaid credit card that works the best for you.