Prepaid credit cards are a good option if you need a credit card but have a bad credit rating that would hinder your ability to be approved for one. Prepaid credit cards are charged with cash, much like you put credit on an electricity card for example. These reusable payment cards work much like debit cards in the sense that you can only spend as much as the card is credited with, but does not require a bank account. There are a number of reasons why prepaid credit cards benefit anyone and everyone who uses them.
Prepaid credit cards can be a good way of providing your children with cash in a safe form, especially if they are going out with friends or on away on holiday.
Because you can only spend the amount that you have put onto the card, you can avoid falling into debt and receiving a getting a paid credit rating. Also, since you are not “borrowing” money from a anyone you will never incur financing fees, late charges, or over-the-limit fees that are all associated with traditional credit cards. There will never be a monthly bill to worry about if you do not have enough money left to pay the minimum balance due. You will only ever be able to spend as much as you preload the card with making it easy to maintain and a stress-free way to manage your money.
Prepaid credit cards are also great alternatives for people who prefer not to deal with banks. As mentioned before, these types of cards do not have to be linked to a bank account. This is especially great for people who are not able to open a bank account due to a bad credit rating, bankruptcy or past negative accounts with other banks.
Many prepaid credit cards come with several features. Other than the basic ability to make payments with the card at a shop or online, you may also be able to withdraw cash from a cash machine, make a bill payment online, or even set up monthly recurring payments for your bills. Not only are they convenient payment options, but they are extremely easy to add funds to. If you need to put more money on your card you can transfer money from a bank account, direct deposit, transfer money from a PayPal account, or even charge it from participating shops.
For many people, this type of payment option is the easiest and safest way to go about their everyday daily lives with peace of mind that they won’t go into debt or hurt their credit score as they could with a traditional credit card.
Image credit: Thomas Kohler (flickr)