A lot of consumers want to know the pros and cons in using prepaid cards. The reason for this is that they want to know whether or not it will be beneficial for them to apply for such card programs. And they want to reach sound decisions whether or not to take and use re-loadable prepaid cards.
Do you belong to this group of consumers? If you do, then we strongly encourage you to read the rest of this article. Below we will be tackling both the benefits and drawbacks that you can expect to encounter when you use re-loadable prepaid card programs such as prepaid debit cards and prepaid credit cards.
Benefits of Prepaid Cards
1.They help limit spending. The major idea of using prepaid cards is to have the convenience of credit or debit cards without the possibility of overspending. Through this card, you will only have limited means to finance a need or an important expense. And once the available balance on your re-loadable prepaid card runs out, you can no longer use your card to make other purchases and pay your bills. This way, your prepaid credit card or prepaid debit card will prevent you from splurging on unnecessary expenses.
2.They provide peace of mind. Since prepaid cards are not in any way linked to checking or savings accounts, you can have an assurance that should your card gets stolen, your bank information will not be compromised. This will give you peace of mind that no unauthorized individual can gain access to your highly-critical bank account.
3.The can guarantee that your card transactions will always be private. A lot of consumers today use prepaid debit cards or prepaid credit cards as they ensure anonymity. This means that you can buy items and products through your card without providing any actual personal information to your vendor. This way, your personal and contact details will not be included in private and government databases, and you can be assured that you card transactions are highly confidential and private.
Drawbacks of Prepaid Cards
1.They require a slew of fees and charges. Prepaid card programs impose numerous fees and charges that may prove very difficult to pay off. Aside from paying processing and activation fees, you may also be required to pay monthly and annual fees, cash withdrawal charges, and declined transaction penalties as you regularly use your prepaid card. Not only that. If you fail to use your prepaid debit or credit card for a long period of time, you may also be asked to pay additional charges such as dormancy fees. So, you really have to be financially prepared to pay all the costs you will incur as you apply for and use re-loadable prepaid cards.
2.They cannot help you improve your credit standing. Prepaid cards can only help instill in you the discipline in managing your finances. However they may not do much to actually improve your credit history. Thus, if you are looking for a card account that can help you repair bad credit history you might as well apply for a secured credit card program as it can guarantee you of achieving your goal.