Anyone can easily get a prepaid credit card at any time and this convenience is one of the reasons why prepaid cards are so popular these days. Are you thinking about acquiring a prepaid credit or debit card too? If so, consider these tips:
Consider a regular credit card. If you can qualify for a standard credit card, consider this option instead of going prepaid. Why so? By choosing a credit card that complements your lifestyle and managing the account responsibly, regular credit cards have a lot of advantages that you can enjoy.
Check the fees. Although prepaid cardholders do not need to worry about high interest rate fees or late penalties, it’s important to check all the fees associated with a prepaid credit card. The most common prepaid card fees are set-up fee, activation fee, monthly fee, reloading fee, overdraft fee, etc. The costs vary from one prepaid debit card to the next. Of course, you want to choose one with reasonable and minimal set of fees to save money.
Read the fine print. Once again, the features and provisions of a prepaid debit card will depend on its issuer. Although the application process is quick and simple, you should spend time carefully evaluating and comparing your option.
You should also understand the exact policies of a prospective merchant. Take note that prepaid debit card issuers do not provide the same type of protection as credit card issuers do. See to it that you’re dealing with a reputable and trusted merchant.
Ensure credit reporting. Today, you can find issuers of prepaid debit cards that will report your activities to the major credit bureaus. The only way you can use a prepaid card to establish credit or rebuild bad credit is to have your activities monitored. For instance, by regularly using your prepaid credit card to pay bills online, you can show your capability to manage debt and repayment.
Avoid overdraft penalties. An overdraft penalty is the fee you will incur for transactions that go through despite an insufficient fund. This usually happens when there is only a small difference between the price of the purchase and the available balance in your prepaid card. The transaction may still go through, but you will be charged with an overdraft fee which will be deducted the next time you reload.
Control your spending. The absence of a credit limit can minimize the risk of debt build-up. However, no one can prevent the prepaid cardholder from reloading as frequently as he/she wants. If you sincerely want to avoid bad credit, you should exercise control over your personal spending and wisely manage your finances.
About the Author:
Tara Tiemann is the credit specialist for Go-Prepaid. Which is a resource site for people who want to live debt free! If you are on a budget, using a prepaid credit card and prepaid debit cards can save you big money!