Can You Really Stay Away from Bad Credit with Prepaid Credit Cards?


Today, more and more people recognize the benefits of owning prepaid debit cards.  Although it does not provide the cardholder a credit line, that same limitation can actually be an advantage for people who want to stay away from bad debt.  Let’s discuss the benefits of owning a prepaid debit card.

Who Needs A Prepaid Card?

Parents who want to provide credit cards to their college kids but may be hesitant to do so for fear of the risk of bad debt.  With a prepaid card, that risk is eliminated.  Parents can choose to limit the amount of cash deposit in their teen’s account so they will be able to stick with a budget.  Once the balance in the account runs out, the cardholder cannot make anymore charges to the card.

Prepaid debit cards are also practical tools for frequent travellers.  It is a great way to shop without cash.  These cards carry the Visa or the MasterCard logo and are a recognized mode of payment in many establishments worldwide.  For online shoppers, a prepaid card is a safer way to shop since you don’t have to reveal your credit card information or bank details.

Advantages of Using Prepaid Cards

What are advantageous of using a prepaid card?  Consider these:

Convenience. Prepaid cards provide the same convenience as credit cards.  You can take your card with you and make purchases without cash.

Cost efficient. Unlike credit cards, there are no interest rates, late penalty charges or over-the-limit costs.

Safe and quicker money transfers. Prepaid cards can be used for quicker and safer money transfers.  If you have a teenager who’s staying in a boarding school, you can send money to your child any time using a debit card.

Control your spending. Prepaid cards cannot be used for advanced purchases.  This reduces the risk of buying on an impulse or spending more than what you can afford.  If you don’t have a balance in your account, you will have more time to consider whether or not you really need to make the purchase.

Build or rebuild your credit history. The great improvement with debit cards is that they can now be used to build credit history or improve a low credit score.  Find an issuer that will report your payments to the three major credit bureaus (Experian, Equifax, TransUnion) and you should be able to improve your credit standing one step at a time.

Costs of a Prepaid Card

Prepaid cards do not charge you with interest rate, over-the-limit costs or late penalty charges, but you need to be aware about the fees before choosing one.  Take note that you will be charged a transaction fee each time you use your debit card for payment.  There is also an annual fee to keep your account active.

Just as it is important to read the fine print when choosing a regular credit card, the same step is important in choosing a prepaid debit card as well.

About the Author

Tara Tiemann is a credit analyst for Go-prepaid.com which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards,prepaid credit cards and prepaid cell phone service can save you big money!


About Liz Roberts

Liz Roberts is the new credit specialist for Go-Prepaid. If you are on a budget, we can get you discounted cell phone service from Sprint, Verizon and T-Mobile! NO CREDIT CHECK ! Using a prepaid services can save you a TON of money! Follow our blog to find out how!