For people who have a bad credit history and cannot qualify for a credit card, a preloaded card is the answer.  Prepaid cards look exactly like any regular credit card except that it is easier to get a prepaid one.  In this article, let’s discuss the advantages and disadvantages of using a prepaid credit card.

Prepaid Credit Card Advantages

Easy Access. Because no credit check is done, anyone can get a reloadable prepaid card at any time.

Budget Friendly. Do you have a problem with overspending?  With pre paid credit cards, spending can be put in control more strictly since you can only use it if you have an available balance in your account.  Once your available funds have been used up, the card must be reloaded with cash before it can be used again.

Avoid Bad Debt. A prepaid card does not provide a credit line so the risk of incurring bad debt can be avoided.  There is no need to worry about paying the interest rate or late penalty fees which can cause debt build-up.

Convenience. Reloadable prepaid cards are great for people who are always on the go.  If you’re a frequent traveler, you can simply take your card with you instead of bringing a huge amount of cash.  Parents who have college kids who stay at boarding schools can send allowance though prepaid cards.

Prepaid Credit Card Disadvantages

Although there is no interest rate or late penalty fees, there are other costs associated with reloadable cards that you should watch out for.  Find a prepaid card with reasonable fees by checking out comparison websites online.  What are the costs that you should know about?

Upfront Fee. Although no credit check is required, most Issuers require the submission of an upfront payment.  Sometimes the fee is known as “application fee” or “activation fee”.

Maintenance Charge. Prepaid cards usually carry an annual fee.  However, aside from the annual fee, you may also be charged with a monthly maintenance cost or “service charge” to keep your account active.

Reloading Charges. Some Banks may impose an additional fee each time you make a deposit in your prepaid card account.  In this case, it is a good idea to find a prepaid debit card Issuer that will not charge a reloading service.

Purchase Fees. Generally, there is a purchase fee for each transaction you make.  It does not matter whether you made the purchase from a regular store or online.  You can still be charged a minimal fee  for every purchase.

Card replacement and renewal fee. In case you lose your prepaid card, there is a fee when you request for replacement.  Also, the issuance of a prepaid card is often good only for a certain time period.  When your card expires, you must pay a fee for the card renewal.

Yes, there are advantages with using pre paid credit cards.  However, before getting one, consumers must make sure that there will be no hidden costs or unreasonable charges associated with their chosen card.

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!

A prepaid credit card is a great alternative to using cash for payment. Pre paid prepaid cards are used exactly the same way as regular credits cards. But in terms of practicality, these cards do have some advantages.
For one, a prepaid credit card helps the cardholder stay out of bad debt. Let’s discuss other advantages of using prepaid cards as well as the disadvantages that you should consider.

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The pros of using a pre paid credit cards:

• Using this kind of card enables you to make purchases without cash. However, it reduces the risk of overspending because the limit depends on the amount of money deposited in the account.

• This card can be used worldwide so if you are a frequent traveler, a prepaid card is safer to carry than cash.

• There is no need to pay credit card bills.

• The procedure for the prepaid debit card application is not as complicated as when applying for a credit card.

• There are no interest fees involved.

• Prepaid cards are can be recommended for those with bad credit history. It can be used to improve a poor credit score.

• Unlike a credit card in which you can swipe now and pay later, you can only use your prepaid debit card after making a deposit in your account. Thus, it helps the cardholder exercise control over his/her spending.

The cons of using a pre paid credit cards:

• You cannot use your pre paid credit cards for payments unless you have existing funds in your account.

• The setup fee for this kind of card can be quite costly.

• There are fees involved for each transaction. Each time you use your prepaid card for payment, you are charged with an additional fee for processing the payment.

• Some prepaid card companies charge certain that can increase over time.

• Not all issuers provide credit reporting to the major credit bureaus.

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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!

Aside from convenience, the primary purpose of getting a student credit card is to build an early credit history. Nevertheless, instead of building a good credit rating for themselves, many young people found themselves stuck in bad credit due to poor credit card use. If you are thinking about providing your teenager with a credit card but hesitant because of the risk of overspending, why not consider getting a prepaid debit card instead?

The Difference of Credit Cards and Prepaid Cards

Credit cards give its cardholders the freedom to use the card for advanced purchases and pay for them at a later time.  Generally, a credit card comes with a grace period where the cardholder must pay off his/her balances to avoid incurring the interest rate fees.  A credit cardholder may choose to pay off the full balance or submit only the minimum required payment.  However, if a credit cardholder fails to submit any payment on or before the due date, he/she will incur an additional late penalty charge plus interest.

On the other hand, debit cards are prepaid or paid in advance.  In order to use a prepaid debit card for payment, the cardholder must have available funds in the account.  When the funds have been used, a prepaid cardholder must make a new deposit before he/she can use the card for new transactions.

The limits of prepaid debit cards minimize the risk of teenagers falling in the debt trap.  Parents can deposit only a limited amount of cash each month to their teen’s debit account to keep their spending on track.  Furthermore, prepaid cards eliminate additional costs on interest rates and penalty fees.

Prepaid Debit Cards that Build Credit

In the past, only credit cards can be used to build credit history.  Today, there are issuers of prepaid debit cards that include credit reporting services to the major credit bureaus.  Yes, a student can now start building an early credit history using a prepaid debit card.  Use the internet to search for debit card issuers with a credit reporting provision.

Send Allowance Conveniently and Cheaply

Prepaid debit cards are also valuable tools for sending and receiving money.  Prepaid debit card money transfers are really much cheaper than using traditional Wire Money Transfer Services.  Parents can transfer funds to their student’s debit account through online banking without the need to pay transfer service charges.

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!