Your Guide to Using Prepaid Credit Cards

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 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!

Leave a Comment

Your email address will not be published. Required fields are marked *