Prepaid Credit Cards
In this high-tech era of computers and machines, the purchasing power of people is mostly based on credit. Nowadays, credit cards are almost indispensable in any business transaction. For one, nobody can purchase anything online without a credit card.
People who have a poor credit history though, will have a hard time getting or renewing their credit cards. This is where prepaid credit becomes useful.
There are lenders that offer prepaid cards branded under both Visa and MasterCard. These cards can be used like a regular credit card. It is impossible to distinguish which card is prepaid by simply looking at it or even using it.
How do prepaid credit cards work? When an account is opened, the card should be “pre-loaded” with cash up-front. This is like paying for a prepaid calling card.
The Prepaid Credit Card Advantage
- Prepaid credit cards can be easily obtained. They can be purchased online or in some local retail stores. It does not require any credit check or proof of income. The only thing to do is to fill out an application and load the card with cash. The amount of cash loaded will be the “credit limit”
- No Interest Charges. When a prepaid MasterCard or prepaid Visa is used, there is no interest charge unlike the regular credit card. The reason for this is that the money used is the owner’s actual money therefore no interest is needed.
- You cannot overspend since you apply the limit.
- Prepaid cards can be used almost anywhere. Both pre-paid Visa and MasterCard is accepted almost anywhere in the world.
Disadvantages of Prepaid Credit Cards:
- Usually a set-up fee of $5 to $50 is needed when an account is opened. Then another fee of $5 or more is paid every time more money is loaded onto the card.. Regular credit cards do not charge a set-up fee but they do sometimes have annual fees.
- Cash up front is needed before any purchase could be made with the prepaid card. This could be an advantage since compulsive spending can be avoided.
- There are some prepaid credit cards that cannot be used to pay regular payments such as monthly electric consumption or online services.
The prepaid credit card is a definite help for people who have credit problems. It is just a matter of choosing the right prepaid credit card that suits your needs.