As the number of cardholders who default on their payments increases, credit card companies have come up with ways on how to service the bad credit market. How? By offering secured credit cards and prepaid debit cards to people with bad credit history.
What Are Prepaid Debit Cards?
A prepaid debit card is a mode of payment which can be acquired by people with bad credit. If you can’t get a regular credit card that requires good or excellent credit history, then a debit card is made for you.
You can use a debit card just like a credit card. However, you must first submit a cash deposit to your account before using it for payment. The amount of deposit you have in your account also determines how much you can charge to your debit card. Once you have reached zero balance, you must make a new cash deposit to your account. What are the pros and cons of a prepaid debit card?
The Pros of Using A Prepaid Debit Cards
Cashless shopping. Instead of bringing along a significant amount of cash when buying your groceries or strolling at malls, you can simply bring your prepaid debit card for safety and ease.
Convenient for travels. Travelers can also enjoy the convenience of using a prepaid debit card instead of paying with cash or checks. Prepaid debit cards with Mastercard, American Express and Visa logos are accepted wherever credit card payment is available so you can take it anywhere you go.
No need to worry about repayment. Once you charge a bill to your debit card, it will be instantly paid off using the money you deposited. With a prepaid card, you don’t have to think about payment due dates, interest rates or late penalty charges.
Anyone can get a debit card. Applying for a prepaid card is so easy and you are automatically granted an approval regardless of your credit history.
Avoid the risk of bad debt. With a prepaid card, unplanned purchases can be avoided since you can’t use it if you don’t have existing funds in your account.
The Cons of Using A Prepaid Debit Cards
Per Transaction Fees. Prepaid debit cardholders must remember that there is an additional fee for every transaction. To cut back on costs, plan your purchases ahead of time so you can pay for all your purchases at once.
No credit line. Some people dislike prepaid debit cards because they can’t borrow against their credit. However, if you take a look at the advantages, you will see that owning a prepaid debit card is worth it.
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!