If you’ve ever been denied a credit card you know that it can hurt your pride. Qualifying for a traditional credit card can be extremely difficult if you’ve never had credit before or if you have bad credit; prepaid credit cards may be the answer for you if this sounds all too familiar. If you’re not familiar with what prepaid credit cards are, here is some prepaid credit card information to make a better decision.
What is a prepaid credit card?
A prepaid credit card is simply exactly what it says it is; it is a credit card that you prepay. It works exactly like a credit card except you put the money on the card and can’t ever overspend and get yourself into more debt than you can handle. The great part about these is that you’re not borrowing money from a bank or any other financial institution; you’re spending exactly what you put on it.
Where can you use your prepaid credit card?
You can use your prepaid card anywhere you would use a regular credit card; restaurants, airline tickets, and hotel rentals are only a few of the places you can use your prepaid credit card. The only place you may not be able to use your prepaid credit card is for specific purchases online. Some companies do not take prepaid credit cards because there is always the risk that there will be no money on it.
What are the benefits of using a prepaid credit card?
There a lot of advantages to using a prepaid credit card; here are a few:
• They are extremely convenient and handy to have in your wallet. You can use them everywhere you would use a Visa or Mastercard.
• Prepaid cards are safer than carrying around a lot of cash in your wallet.
• They are great for teaching kids are to budget and spend money. They allow you as a parent to track spending and help your kids learn how to budget.
• Prepaid credit cards can also be used for giving gifts to friends, family, etc. They make great presents for everyone.
How is a prepaid card different than a credit and debit card?
The major difference between a prepaid credit card and a regular credit card is that you control what your spending limit is. While most regular credit cards claim that you have control over your spending limit, a prepaid card allows you to spend what you have and no more. A prepaid card also does not have any finance charges or late fees. The difference between a prepaid credit card and a debit card is that the prepaid card is not taking out of a checking or savings account. When you purchase something using your prepaid card the money is taking from the balance on your card, not from an account you have with the bank.
Are there spending limits on a prepaid credit card?
Well, yes and no. It really depends on how much money you put on the card and how much freedom you give yourself. Your spending limits are what you give yourself and what you deposit onto your card. So yes you have a spending limit; however much money you put on your card. And no you don’t have a spending limit because you can keep putting money on your prepaid card.
Prepaid credit cards are becoming more popular for those that have no credit or great credit. Hopefully this prepaid credit card information will help you in your decision.