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Prepaid credit cards are those cards which are sanctioned as credit cards but work like debit cards. These cards help a consumer manage his finances in an easier way.
The normal credit card poses a lot of problem for a person with a poor a meager credit. Banks reject their applications for credit cards. Such people can turn to prepaid credit cards. They are also called Prepaid Debit Cards or Stored Value Cards.
To get started, an account for the prepaid credit card has to be opened, where you will deposit money in advance. The procedure for this is similar to opening a savings account in a bank. The bank then issues you a prepaid credit card which can be used just like a credit card, anywhere you want. You can make all your transactions without worrying about debts, bills or loans.
Prepaid credit cards work best for:
- Students who are not familiar with the system of credit.
- People who in the past, had credit related problems and therefore have difficulty in procuring normal credit cards.
- Those who detest the entire concept of debt.
The benefits of prepaid credit cards are:
- They can be ordered online without any inquiries about your credit history.
- Since a credit card works as long as there is balance in your account, you can remain assured of not falling into debt.
- There are no interests, late or annual fees. Therefore, it saves your money.
- They offer protection against fraud.
- They help parents in training their children (teenagers) about handling of money and budgeting.
The downside of prepaid credit card is that you have to pay an activation charge that can range from $19.95 to $159.95. Some companies charge a monthly service charge and fee for every transaction.
Prepaid credit cards are great means of hassle-free finance management without ever falling into debt.
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