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Pre Paid Credit Cards

in Credit Card 101

If you’re thinking that credit cards always put you in debt, think again.

There is a kind of credit card that limits your spending to the value that the card contains. In general, there are no monthly bills, no high interests, and no problem of getting into credit card debt problems. You don’t have to have a good credit record to have a pre paid credit card. All you need to have is money deposited into the card account. You can think of it as something like a gift card with preloaded value – except that you’re also the recipient.

When thinking of getting or applying for a pre paid credit card, you need not worry much. Pre paid credit cards are offered by both Visa and MasterCard. This gives you advantage of having a known and credited card company supporting the credit card. These cards are also available from banks and other financial institutions. Some would offer promos that would give you free or instant pre paid credit cards. There are also companies that offers virtual pre paid credit cards.

Advantages and Disadvantages of a Pre Paid Credit Card

As mentioned earlier, a person with bad credit is allowed to own a pre paid credit card. There’s no need to have good credit rating or any other complex requirements. Generally, all you need is to fill-out a form, present identification, and then deposit money. After that, the card is yours.

Some credit card companies will provide you with a PIN so you can use it in different transactions such as online payment, phone purchases and ATM withdrawal.

You need not worry about getting out of credit card debt or other debt related problems. This is because you are just spending your own money. Once depleted, you’re not allowed to spend further. The principle behind the pre paid credit card somewhat resembles that of a debit card.

When speaking of ability to purchase goods and services, pre paid credit cards usually provides the same benefits compared to a common credit card, with one major exception – to avail the service or take home the product without any money at all. Yes your options are somewhat limitless because you can purchase wherever the card is accepted, but you can’t enjoy anything in advance since you’re not allowed to borrow money if the amount exceeds the amount left in your account.

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Other things that you need to consider in a pre paid credit card are the fees that are imposed in your every transaction. Such include fees during card application, on succeeding deposits, during cash withdrawals, card renewal and others. The best advice is to read the terms and conditions, and then scrutinize every item to make sure that you understand every policy that applies to the pre paid credit card.

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