Benefits Of A Prepaid Credit Card For Your Finances

by Hank Coleman

gold credit cardWhen you go to the shops what do you use to pay for your goods? Most people these days use a credit card or a debit card. But, do many of you own a prepaid credit card? There are many advantages associated with a prepaid debit card or a prepaid credit card that are worth taking into consideration. There are benefits of a prepaid credit card that you should consider.

What Is A Prepaid Credit Card

First of all it is important to establish what a prepaid debit card or prepaid credit card actually is. This type of card is exactly as it sounds. It is simply an account that is opened via depositing money into it. The owner of this account is then presented with a credit card that can be used just as any other credit card can. However the amount of money available is determined by the amount of money the individual initially deposited.

What Are The Benefits Of A Prepaid Credit Card

There are many benefits associated with a prepaid credit card or prepaid debit card. They first began to become popular in America in the 1990’s because many people were not able to qualify for a standard credit card. This is often if not more so the case today. With a prepaid credit card you won’t have that problem because the account is based merely on the deposit you pay up front, not your previous credit ratings. This makes a prepaid account the perfect answer for those with a bad foregoing credit history.

A Safe Way To Carry Money

The main benefit of using a prepaid debit card is that they are one of the safest ways of dealing with money, they are certainly safer than carrying around cash. As mentioned, you use the card just as you would a standard credit card, thus you are issued with a pin number. Therefore if your card is lost or stolen it cannot be used without that number.

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Accepted Almost Everywhere

You do not have to worry about the validity and acceptability of your card as they are available world wide due to the fact that they are issued through popular and dominant companies such as Visa and Mastercard. This is important because most people use a type of card for almost everything they purchase, whether it be booking or holiday or buying some online shopping. A lot of purchases are made online today and obviously you can not pay for goods with cash via a computer, therefore if you are not accepted for a credit card how can you possibly pay? This is where the prepaid debit card or prepaid credit card comes into play.

Take Control Over Your Finances

In addition to safety arguably the other most important thing is that your spending is disciplined and there is little room to go financially out of control. As you put the money into your account you can only spend what you have thus no debt can be accumulated, interest is not a worry and there are no bills for you to pay. This is particularly good for those who have to be careful with their money or those who have trouble watching what they spend.

24/7 Customer Service For Prepaid Debit Cards

Most prepaid debit cards  have a 24 hour enquiry phone line so you can check your balance and manage your account whenever you need to. There are also many Payzone outlets at which you can top up your account, or if you would prefer you can also have your wages paid directly into your new prepaid paradise.

Differences Of A Prepaid Credit Card And Prepaid Debit Card

Many of you may be thinking that a prepaid card is exactly the same as a debit card, however this is not the case. A debit card is linked to a bank account, a pre-paid card is not. Also, with a debit card you have an overdraft facility which can often be the path to excess debt. There is no overdraft option available with a prepaid card.

Therefore, if you are looking for a convenient stress free way of looking after your money and paying for things securely then it is certainly worthwhile taking the time to consider a prepaid credit card or prepaid debit card.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 588 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 5 comments… read them below or add one }

krantcents

It seems like a great way to fund a student or young person in school or college. Similar to giving them an allowance.

Reply

Elizabeth @ Broke Professionals

So basically, you’re funding your own credit limit. Makes sense to me! I’m wondering if this might be a good way for me to pay for things when I go to Europe next month.

Reply

KC @ genxfinance

That would be an awesome way to control your expenses and budget. Living within your means. But, you should not cheat on it and spend more.

Reply

Dylann Andre

I like the idea of having this prepaid credit cards. It is much easier to control the money spent.

Reply

Yasmin E. Parsloe

We can all agree prepaid credit cards are excellent for travelling, budgeting your college bound student and taking over your own spending habits. I want to emphasize though, that if you are interested in building your credit, there are similar concepts that will help you do so as prepaid credit cards are not reported to the three main credit bureaus (Experian, TransUnion and Equifax), instead they are occasionally reported to a consumer credit reporting agency called Payment Reporting Builds Credit (PRBC).

Secured credit cards offer a method of accumulating credit if you are not approved for an unsecured credit card. A secured credit card is different, as the approval is based on the amount of the deposit you put down. Your deposit then becomes the credit. Sound too good to be true? You must, however, do research before applying for a secured credit card as they often come with high fees and unfavorable terms. I recommend the Open Sky Secured Visa Credit Card for first time users.

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