debit card

Prepaid Credit Cards

The first thing to understand here is that a prepaid credit card is not the same as a debit card. Debit cards require you to have a bank account and expenses on those cards are paid off from the money that is in the account.

Prepaid credit cards are empty until they are “loaded” with money. It is a relatively simple process, where an individual requests for the card and specifies the amount that they are going to put into it. From this point on the card functions as any other Debit card would, in the sense that you will not be able to purchase more than the amount that is left on your card.

But why would you want to get one of these cards?
1. They are easy to get. Several companies offer them in the U.S. and Canada. A few even offer them to international customers.
2. You have a limit to your spending
3. You can avoid carrying cash
4. You can never get into debt as there is no interest
5. No monthly payments
6. Useful in situations where you don’t want to have a credit card but are forced to use one.(e.g. online purchases where Debit Cards are not accepted)
7. Safe to give out to kids due to a limit being imposed
8. They have all the features that a normal credit card does without the negatives.

Although they are beneficial, there is a cost for using them. After all, the company that offers you this method of possessing a credit card has to make money. There are maintenance and loading fees as well as fees for withdrawing from an ATM. As long as you are mindful of these costs, using a Prepaid Credit Card should be a pleasant experience.