Tag Archives: prepaid credit cards

What Are The Benefits of Prepaid Credit Cards?

Prepaid credit cards have become all the rage lately as these cards provide a valuable financial transaction service that many people have long since needed. Essentially, prepaid credit cards are not credit cards at all because they do not extend credit. That service is the ability to use a debit card wherever credit cards are accepted. Instead of advancing credit charges one draws from a finite amount of deposited cash. Now, some may consider this a somewhat unnecessary service, but when one examines the benefits of prepaid credit cards it becomes obvious that these cards have a great deal to offer.

For starters, prepaid credit cards are a great way to protect oneself from fraud. While we would all like to assume that the world is made up of honest people, it is not. As such, there have been a great number of instances where people have been defrauded of their credit card funds. This happens often online as a number of less than reputable sellers operating out of seemingly unknown locations in the world rip people off for their credit card information. Considering the following common scenario: a person finds a website selling used books and makes a purchase using credit card information and when the credit card statement arrives it is discovered that the $5 book purchase led to $2,000 of purchases with the provided (and compromised) credit card information. Now, a prepaid credit card would be quite beneficial in this instance or in any instance where one is purchasing from an unknown vendor. For example, one could keep a very minimal amount on the prepaid card (say $20) so that if it is compromised the losses will be minimal and the card can simply be discarded.

Also, these prepaid credit cards are the same as using cash to pay for items without having to carry cash around. This can provide a safety net so to speak if the card is lost or stolen. For example, if you record the account number of the prepaid card and the card ends up being lost you could quickly transfer the balance of the card to another account. This way, no money is lost. Now, if a wallet full of cash was lost then…oh well…it is gone forever. As such, the ability to replace cash with an alternate means of payment is always a huge positive particularly one that also has a threshold limit of spending much lower than a credit card as a lost credit card can prove even more calamitous than lost cash.

Another aspect of prepaid credit cards that is supremely beneficial is the fact that these cards are based on a finite amount of money as opposed to advancing money on a borrowed basis. For some, there is a lack of desire to amass credit card debt, but the need for a credit card in the modern world is generally unavoidable. Additionally, there will be those individuals who would like a credit card but for a number or reasons they are turned down due to bad credit, lack of credit, etc. In regards to these problems, these prepaid credit cards come in handy as they provide a solution to such a dilemma.

As one can see, prepaid credit cards have a host of benefits that speak volumes for the value of these cards. So, if worries about lost or stolen cash or credit cards, overextending oneself on credit or simply wanted to avoid the complexities of applying for a credit card, prepaid credit cards provide a simple, safe and sane solution. What better of an endorsement could one ask for than that?

The Pros And Cons Of Prepaid Credit Cards (Page 1 of 3)

Observers in the lending industry have estimated that there may be at least 50 million Americans who are not able to qualify for credit. These consumers are usually young, often members of the minority groups and unbankedÂ…and they are faced with the long-standing dilemma of credit: how can I build my credit record if no one will give me any credit at all?

One of the answers offered by credit card companies is a variety of prepaid credit cards, designed for use by specific segments in the market. The prepaid credit cards are meant for that significant portion of the population that cannot meet the qualification criteria for regular credit cards, or who qualified before but have since lost their credit due to repeated defaults and other reasons.

Advantages of Prepaid Credit Cards For those who do not have enough credit history or have had it blemished, prepaid credit cards are an effective way to build or slowly rebuild credit. That may not happen immediately, but it is something to work on over time. The banks that issue prepaid credit cards are also prepared to extend normal credit the moment you are able to show that you have become a worthy credit risk.

For the moment, you may have to make do with prepaid credit cards. You can use prepaid credit cards as you would any other regular credit card to purchase airline tickets, reserve hotel rooms, or order items online.

Prepaid Credit Card for Students

There is a special prepaid Visa credit card for students, which offers a lot of convenience not only for the students but also for their parents. These reloadable prepaid credit cards offer parents several options on how to reload. Parents can add money to reloadable prepaid credit cards by depositing money, by arranging an automatic transfer of funds from their account (a deposit account or their own credit card account), or by online transfer. Using the prepaid Visa credit card is no different from giving the regular allowance to their child, only they do so by electronic means and there is no more cash that changes hands.

The big advantage of the prepaid Visa credit card is that the student is limited to spend only as much money as there is in the card. The parent is thus able to control to some extent the spending behavior of their child. They can use the prepaid credit card anywhere that the credit card brand is accepted.

Prepaid Credit Cards as Gift Certificates Some prepaid credit cards function like gift certificates. You buy the prepaid credit card for a certain amount, and your recipient can purchase items with it at any of the brick-and-mortar stores or online merchants, and also for mail order items, that accept the particular credit card brand. Your recipient can use the prepaid credit card only up to the amount of money that you loaded on it. This particular version of prepaid credit cards is non-reloadable.

Like any gift certificate, recipients of prepaid credit cards can buy whatever it is they want at any time they want. Unlike a gift certificate that, when it gets lost is lost forever to the recipient, prepaid credit cards may be replaced if it gets lost or is stolen.