Have you recently been hurt by having too much credit card debt? Too afraid of debt? Tired of getting credit card bills? If you used plastic all the time and want to find a good alternative that is just as easy and convenient to use, a prepaid credit card is the best choice.
What are credit cards that have already been paid for?
If you've ever used a prepaid phone card or sim card, you already know how a prepaid credit card works on a basic level. You just have to "load" it with money and use it like any other credit card. It can be used to pay for things in any store, and many online transactions also accept it. You can also take money out of any ATM.
A prepaid credit card is basically the same as a debit card, except that it is a separate account. Either a savings account or a checking account can be linked to a debit card. You just need to open a prepaid credit card account and put money in it, just like you would with a regular bank account. The bank will give you a prepaid credit card after you pay the fees, which could be anywhere from $5 to $50.
Many banks offer Visa or Mastercard pre-paid credit cards. Western Union, Greendotonline, and Rush Card are a few more. You can also buy prepaid credit cards at some stores, malls, and even gas stations.
Where do you give credit?
The name "prepaid credit card" is probably a misnomer, because when you use it, there's no credit involved. When you pay with a credit card, you use money you don't have yet, but your banker or credit card company guarantees it for you.
When you use a prepaid credit card, you can only spend the amount of money you put on it. If you have $300 on your prepaid credit card, you can't buy something that costs $325. It's really that easy.
Who can use a credit card that has already been paid for?
A prepaid credit card is a good way to keep track of how much you spend on shopping. It is also a good alternative to a regular credit card that you couldn't get because of bad credit or any other reason. You can use a prepaid credit card the same way you would use a regular credit card.
Advantages
Spending limit: With a prepaid credit card, you can only spend as much as you have left on your account. You don't need to go over your credit limit because the only limit you have is the one you set for yourself. If you only put $500 on your prepaid credit card each month, you can only spend that amount until the next time you put money on it.
Absence of debt: With a regular credit card, you can buy things and pay for them later in full or with a minimum payment that includes interest. When you use a credit card, you add to your debt. With a prepaid credit card, you don't put purchases on credit. Instead, you pay for them in cash. You also don't have to worry about getting monthly bills.
You don't have to go through a credit check, and you don't have to wait to get your prepaid credit card approved. There is no age limit either.
Disadvantages
The limit on how much you can spend is both a benefit and a drawback of prepaid credit cards. With a regular credit card, you can buy big things like appliances and furniture. With a prepaid credit card, you can only spend as much as you have in your prepaid account. Once it's gone, you can't buy more until you put money into that account.
Fees: Every time you put money into your account, you have to pay a small fee. Some prepaid cards also have a minimum fee that you have to pay for each transaction.
There are limits on how you can use a prepaid credit card. For example, you can't use it to make regular automatic payments, and some smaller stores won't let you use it to buy things. A prepaid card will also not help you build or even start your credit history.
