Best Prepaid Credit Cards Are
Have you been burned by too much credit card debt lately? Too scared of credit?
Had enough of credit card bills? If plastic was a way of life for you and you’re thinking of looking for a good alternative that is as convenient and easy to use, then a prepaid credit card is the perfect choice.
What are prepaid credit cards?
If you’ve used a prepaid phone card or sim card before, then you already have a basic idea of how a prepaid credit card works.
You just need to ‘load’ it with money and then use it as you would any regular credit card. It can be used to pay your purchases at any store and is also accepted for many online transactions. You may also withdraw cash from any ATM.
Essentially, a prepaid credit card functions as a debit card, except that a prepaid credit card is a separate account.
A debit card is linked to either a savings or a checking account. You just need to open a prepaid credit card account and deposit money, just like you would with a regular bank account.
After you pay the fees, which could amount from $5 to $50, the bank then issues you a prepaid credit card.
Many banks offer prepaid credit cards under Visa or Mastercard. Other providers include Western Union, Greendotonline and Rush Card. Prepaid credit cards can also be purchased at selected stores, malls and even gas stations.
Where’s the credit?
The term ‘prepaid credit card‘ is probably a misnomer because there’s no credit involved when you use it in any transaction.
With a credit card, you pay with the money you don’t yet have, but which your banker or credit card company guarantees for you.
With a prepaid credit card, you only spend the money you loaded the card with. For example, if you have $300 on your prepaid credit card, you can’t purchase a $325 item. It’s that simple.
Who can use a prepaid credit card?
A prepaid credit card is a good tool to help you curb your shopping expenses. It is also a good alternative to a regular credit card that you didn’t get due to bad credit or for any other reason.
A prepaid credit card lets you enjoy the usage benefits a regular credit card can offer.
Spending limit – a prepaid credit card will only allow you to spend the amount that is left on your account, nothing more.
You don’t have to go beyond a credit limit because the only limit you have is self-imposed. If you load just $500 on your prepaid credit card account monthly, that’s the amount you’ll get to spend, until the next time you load it again.
Absence of debt – regular credit cards let you ‘charge’ purchases and then pay them back at a later date in full or make a minimum payment with interest.
Every time you use a credit card, you incur a debt. With a prepaid credit card, you don’t charge purchases, but pay for them outright, on cash basis. You also do not have to worry about monthly billing statements.
Fast processing – you’re not required to undergo a credit check and there is no waiting to get your prepaid credit card approved. There is also no age limit.
Spending limit – the advantage of a prepaid credit card is also a disadvantage. While regular credit cards allow you to buy large purchases
(such as appliances and furnitures), a prepaid credit card limits your buying power to the amount currently deposited in your prepaid account. Once it’s gone, you can’t buy more until you deposit money into that account.
Fees – each time you make a deposit to your account, you pay an additional but nominal fee. Some prepaid cards also charge you a minimum fee for every transaction.
Limit of use – you can’t use a prepaid credit card to pay regular automatic payments and some smaller retailers don’t accept transactions made with prepaid credit cards.
A prepaid card will also not help you establish your credit, much less rebuild it.
Advantages And Disadvantages Of A Prepaid Card
Prepaid cards are one of the newest and most interesting financial products on the market, and they are something that everyone should be made aware of.
However, many people do not know what prepaid cards are, and how they can benefit you. If you want to know more about prepaid cards, then here is some advice about their advantages and disadvantages.
What does prepaid mean?
Many of us have prepaid phone cards or SIM cards for our mobiles, but prepaid debit cards are quite a new idea.
However, the concept is the same as other prepaid mediums, where you load money onto a card and then you can spend this money at retailers or withdraw the money at an ATM. You load money onto the card using cash, bank transfer or another card.
Are they credit or debit cards?
Prepaid cards are neither credit nor debit cards, but have features similar to both. These are VISA or MasterCard cards usually, and so have the wide usage and security features of a credit card.
However, you are not borrowing money, simply using your own money to top up a card and spend on it. They are a financial product that falls in between debit and credit cards.
What are the advantages?
The major advantage of a prepaid card is that you can easily keep track of your spending and limit yourself to a certain level of spending each month. Also, you don’t have to pay interest and don’t have to go through credit checks to get one.
All of the funds on the card are completely controlled by the amount of money you wish to put on it. This means there is no risk of borrowing too much and getting into debt.
Who should get a prepaid card?
Prepaid cards can be useful for anyone who wants to control their spending but still have the security and usage features of a credit card.
Also, prepaid cards can be very useful for teenagers or children if they need a card. As a parent you can control their spending by only putting on a certain amount each week or month for them to spend, whilst still giving them the freedom and security to purchase items using plastic.
The costs of a prepaid card
Although prepaid cards have many advantages, they can cost you money through various charges and fees. Many prepaid cards carry an application charge as well as a monthly usage charge.
If you are paying a monthly service charge, then you need to make sure that other services are given to you for this money, such as helplines or added security.
Before getting a prepaid card, you should shop around to find the card that has the lowest fees. Although you are not paying interest, these fees can add up and if you don’t use the card a lot could cost you more than you will end up spending.
However, if you look around there are some good deals to be had. If you want to control your spending or your child’s then getting a prepaid card might be the answer.
Prepaid Credit Cards – The Facts
The idea of a prepaid credit card has been around for a number of years, but it’s only now, with the level of personal debt soaring, that it has really started to take off.
But what is a prepaid credit card? How does it work? And most importantly, can it help you avoid getting any deeper into debt?
The Basic Idea
If you’re familiar with the idea of a prepaid phone card or a prepaid gift card, the idea won’t be new to you. It’s basically just a credit card without the credit.
You load money into your card account and can then spend it using your plastic card as you would with a normal credit card.
These prepaid credit cards are accepted by hundreds of thousands of retailers and online merchants.
Dozens of financial institutions offer prepaid accounts backed by either Visa and Mastercard so they can be used globally. In fact, anyone who accepts credit cards will be able to accept your prepaid card.
And the uses are almost endless;
Top up your cell phone
Pay your bills
Buy groceries and petrol
Book flights, hotels, tickets
Transfer money to family and friends
You can even withdraw cash from your account at millions of ATMs all around the globe
And once you’ve spent the money in your account, you can “recharge” it with more money.
The main benefit is that these cards are extremely flexible. You can load money onto your account using cash, bank transfer, or even using another credit card (but that’s probably best avoided if you want to avoid debt).
And because most prepaid cards are backed by Visa or Mastercard, you can use them anywhere in the world as you would with a traditional credit card.
In fact, the use of these cards is so similar to credit cards that they’re usually called prepaid credit cards, despite the fact that credit is not involved.
The only difference is that you have to fill up your account with your own money before you use your prepaid card, which brings us to the other main benefit.
It’s impossible to get into debt using one of these cards, because if you don’t have any money in your card account, it won’t be accepted.
That gives you more control over your spending. It allows you to set a budget and put that amount in your account.
There’s no risk of overspending on one of these cards, which is a major advantage if you’re trying to escape debt or are worried about getting into debt.
And as with credit cards, you’ll receive a regular breakdown of your spending on the card, which is great for keeping track of your spending.
And because you’re not advanced any credit, there’s no interest to pay and no credit checks to get one of these accounts. That means everybody is eligible to get a prepaid card, even if you have a bad credit record.
Other benefits include;
Travel: These cards have the same travel benefits as normal credit cards. They’re accepted worldwide, especially those backed by Visa and Mastercard.
You can withdraw cash from millions of ATMs across the globe. If you select the right prepaid card, you’ll also be able to take advantage of foreign exchange services without paying fees. And if you lose your card, just contact your provider and they’ll provide you with a new one.
Safety: If you use your card to make a purchase (by phone, internet or in person) and it is used fraudulently, the provider of your card will cover the loss just like a traditional credit card. These cards are also safer than carrying cash, which brings us to the final prepaid benefit.
Children: Prepaid cards are the perfect way to provide your children with a safe way to have access to money that you can control.
Many prepaid cards are open to people of all ages, although as with traditional credit cards, some companies restrict the use of their prepaid card to people aged 18 and over.
As for the debate over whether it’s a good idea for children to be allowed a prepaid card, some people argue that it will make children more financially aware from an earlier age.
They claim it will teach them to understand the value of money and develop better money management skills as they grow up. It will allow them to budget without the risk of getting into debt.
Other people claim that it will encourage them to develop reckless spending habits, especially if their parents keep topping up the account.
If parents are too generous, their children could get used to the pot that never runs dry, and get into serious debt when they eventually get their own credit cards.
Ultimately, it’s a decision that all parents will have to make for themselves, but if used responsibly, the benefits of prepaid credit cards heavily outnumber the disadvantages, for all users.
Secured And Prepaid Credit Cards
With so many consumers looking for ways to rebuild their credit, secured and prepaid credit cards are growing in popularity.
Some people swear by them, and others try to avoid them. If you’re new to credit cards, you may have wondered how a prepaid card differs from a secured card, and how either kind can be used to build credit.
Secured credit cards work much like regular credit cards, but with less risk to the card issuer. The cardholder deposits money into an account, which is used to secure a line of credit.
Typically, the cardholder needs to deposit enough money to cover 100-200% of the card’s credit limit. For example, a one thousand dollar deposit would result in a credit limit of five hundred to one thousand dollars.
Secured cardholders are responsible for timely payments, just like regular cardholders. This is a good thing, because it teaches good repayment habits and helps to establish a positive payment history – a very important part of rebuilding damaged credit.
If a secured cardholder does default on a payment, the card issuer is protected; they can recover their loss by taking it out of the cardholder’s deposit account.
Critics of secured credit cards point out the difficulty of coming up with a lump sum of cash to use as the deposit, and they do have a point; if cash is that tight, perhaps it isn’t the best time to get a credit card of any type.
By contrast, prepaid credit cards are not actually credit cards at all. They look like them, and can be used like them, but they are really more similar to debit cards.
The cardholder deposits money into an account and the prepaid card is then used to draw on these funds. No actual credit is offered by the card issuer. Setup fees and small monthly fees usually apply.
Prepaid cards can be issued to minors. These cards are popular with parents of teenagers who want their kids to have access to a credit card, but one with a definite spending limit in place.
No large, up-front deposits are required to obtain a prepaid credit card. The prepaid card limit is up to the purchaser, who can load the card’s account with an amount of their choosing.
Prepaid cards can also be used to establish or rebuild credit. Some issuers give out cards with the Visa or MasterCard logo on them, and these cards can be used anywhere those brands are accepted.
Setup fees and monthly fees vary by issuer, so do a bit of research to find the best prepaid card for you.
You will find that your options are plentiful, and competition between issuers is steep – which is good news for potential cardholders.
Secured and prepaid credit cards are similar in form and function, with a few notable differences. If your credit is damaged or nonexistent, these cards present an opportunity to improve your situation.
If you have a teen or young adult with an allowance, but don’t want to worry with cash or checks, prepaid cards can be a safe and convenient way to store their money. Likewise, if you have trouble limiting your own spending, you might want to try one of these cards.
But if your credit is average or better, and you’re able to control your spending and pay off your credit card balance each month, you might be better off going for a standard, unsecured credit card.
The interest rate and fees will almost certainly be lower, and you won’t have to worry about putting up a big deposit.
There are many available cards to meet many needs. A little research should turn up the card that best meets yours.
Prepaid Debit Cards: Your First Step Toward Better Credit
If you’re having trouble getting approved for a credit card, a prepaid debit card may be just what you need. Unlike many regular credit cards, prepaid debit cards do not perform a credit check when you apply.
So if you’ve had trouble with credit or have no credit, you’ll still be approved for a prepaid debit card. And these cards come with other benefits as well. A prepaid credit card can be the first step down the path to better credit.
How Prepaid Debit Cards Work
Prepaid debit cards are similar to both credit cards and debit cards. After getting approved for one, you’re able to deposit money into your new account.
This is often referred to as “loading.” The amount of money you load on to your card is equal to your line of credit. When you swipe the card, the money is subtracted from the amount you deposited.
As long as you have money on your card, you can make purchases. You can use the card anywhere that debit cards are accepted.
Having a prepaid debit card is similar to opening a checking account on a card. You can deposit money whenever you need to, and spend within your account limits. This system helps keep you far away from credit card debt.
Benefits of Prepaid Debit Cards
One big advantage of prepaid debit cards is that they are safer to carry than cash. You can shop for groceries, get gas, and purchase other items without the hassle of dollar bills crowding your wallet.
And prepaid debit cards are accepted all over. If you have a card with the MasterCard or Visa logo, it can be used worldwide.
Another benefit of a prepaid debit card is that you don’t have to worry about paying monthly credit card bills. Since the amount at your disposal is equal to the balance in your account, you don’t spend money that you don’t have. This saves the headaches involved with high monthly bills and balances.
It’s easy to load money on to your prepaid debit card. Most cards let you reload any amount of money by calling and authorizing a transfer of funds. You can also do this online or through an ATM. This lets you control how much you want in your account.
Exploring your Options
Companies offer different types of prepaid debit cards. Before you sign up for one, check for additional fees and features. One card that lets you transfer money for free is the ReadyDebit card.
With no credit checks and no security deposits required, you can begin using the card right away. It’s issued through Visa, so you can use it wherever Visa is accepted.
Another one to check out is the Prepaid Visa RushCard. With this card, there are no annual or monthly fees. You can use the card online or over the phone to make purchases. The Prepaid Visa RushCard also offers some shopping discounts at participating retailers.
A prepaid debit card may be just what you need to give your credit a boost. Check through the different options through credit card websites.
The application process is easy. Once you get the card, you can start taking steps to get back on track in the credit card world.
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