Posted on December 1st, 2011 by admin in Uncategorized

The Advantages to Using Prepaid Credit Cards

Many individuals with poor credit lack access to credit cards. The burden of having to pay cash can be heavy, not to mention the modicum of embarrassment that comes from not having a credit card. Good news for these individuals comes in the form of a prepaid credit card.

A prepaid credit card eliminates the need for a credit card application or credit check because the cardholder funds the card in advance of any purchase. One simply selects the amount and provides the funds to the prepaid card issuer. The card is activated and a physical card is issued which may be used anywhere a traditional credit card is accepted.

Prepaid cards are not only for those who have poor or no credit. Growing in popularity is the use of prepaid credit cards for children. Instead of providing cash (where purchases cannot be tracked) or a traditional credit card (where overspending can occur), a prepaid card can be set up with purchase limits to eliminate overspending. This can teach children good credit card use habits, which will be useful when they are responsible for their own credit.

Another advantage of a prepaid credit card is the built in spending curb provided. Those prone to overspending and running up debt are secure as purchases are limited to the amount of upfront payment. The prepaid credit card also eliminates monthly bills and statements, and since there are no balances, there is no interest or late fees. As the balance declines, the card can be recharged with additional funds.

Prepaid credit cards are not free however. Most either charge an account set-up fee or transaction fee or both. Replenishing the card balance also results in a fee. This is where the savvy consumer needs to do their homework before choosing a card. There are many prepaid card options available, so make sure you carefully read all terms and conditions, which come with your card. This will help keep fees and charges from draining your balance. Hence, you should take guidance for applying for prepaid cards.