Prepaid Credit Cards Explained
If you’ve used a store gift card in the past, then you’ll be clear, on the basis of how a prepaid credit card works. The concept is very easy to grasp: a prepaid card is already loaded with your money, so the amount that is spent using the card is controlled by yourself. These cards can normally be used everywhere that the archetype credit card is accepted.
Prepaid credits work in exactly the same way that a regular credit card works. To pay for your item or service, you swipe your card and then either enter your PIN (which is supplied with the card) or sign the receipt. The total amount of the transaction is then withdrawn from your card immediately.
The main difference between a prepaid credit card and a normal credit card account is that with prepaid card, you are dipping into your own money, rather than using funds borrowed from your lender. Therefore, you can only use the card until your pre-loaded cash runs out, or until you top up the account. Funds can be loaded onto your prepaid card by cash at your bank or at the Post Office, via bank transfer, or via payment from another credit card.
A prepaid card has the same appearance as a regular credit card, and can be used to buy all sorts of everyday expenses, including groceries, bills and petrol. Prepaid credit cards are extremely useful, when shopping online or overseas.
A few online retailers and service providers, for example, certain hotel and airline websites, only accept payment via a credit card, a prepaid account gives you the option to use these sites without having to apply for an active credit card.
The other benefit of a prepaid credit card is the flexibility it provides for certain people and situations. For example, if you’re new to a country and you haven’t yet built up a credit rating – or you have a history of bad debt, and you’re starting your credit record from scratch – a prepaid credit card could help you build your credit file.
Furthermore, if you’re going on a holiday, a prepaid credit card offers you the opportunity to load a certain amount onto your card, so you can avoid paying foreign currency exchange fees – allowing you to stick to an estimated or agreed budget!
With prepaid credit cards you will not be subjected to any credit checks, so you can usually get signed up for a card instantly. Just watch out for the fees: some providers charge a card application fee on top of monthly service charges, cash load/deposit fees and withdrawal/purchase fees, so it pays to shop around for the best credit card deal.
[...] Prepaid Credit Cards Explained With prepaid credit cards you will not be subjected to any credit checks, so you can usually get signed up for a card instantly. Just watch out for the fees: some providers charge a card application fee on top of monthly service charges. Mail this post [...]