Applying for credit cards can be exhausting and frustrating; especially if your credit is less than acceptable. If you have experienced this frustration but would still like some type of credit to boost your credit standing, try getting a prepaid credit card. There are many advantages of prepaid credit cards. Let’s take a look at what exactly prepaid credit cards are, and why they can benefit those that cannot qualify for a traditional credit card.
What is a prepaid credit card?
Not owning a credit card these days can be a drawback when it comes to booking hotels, renting cars, or making airline reservations. Prepaid cards are pretty much exactly what they say; prepaid. Think of it in terms of a prepaid calling card for making phone calls. It works in much the same way; you open a prepaid credit account at the bank by depositing money into that account the same way you would deposit money into a checking or savings account. Once the money has been received into the account you will receive the prepaid credit card. You can use your prepaid credit card the same way you would use a traditional credit card.
Advantages of prepaid credit cards
Prepaid credit cards carry many advantages for someone who cannot qualify for a traditional credit card, and someone who can qualify for a regular credit card. Let’s take a look at some of those advantages:
• Staying out of debt- One of the biggest advantages in using a prepaid credit card is that you can only use the money that you really have. There’s no way that you can get into more debt than you can handle because the card has been prepaid. Whereas with traditional credit cards you are given a line of credit with so much money and many people spend more than they actually have.
• Not extra charges- With prepaid credit cards there are not bills and interest charges to consider. Prepaid credit cards are similar to using debit cards where your money is tied to a checking or savings account. Since the applicant is the one putting the money on the card there are no unknown monthly charges to the prepaid card.
• Easy qualifications- Prepaid credit cards are much easier to qualify for and receive than a regular credit card. In some cases they can even be bought on the internet.
• No credit checks- When you apply for a prepaid credit card they usually don’t have to do a credit check or any type of investigation into your income or employment. This is a huge advantage for individuals with poor credit scores. This allows them to have some type of credit without going through the process of someone checking up on them.
• Spending independence- Since a prepaid credit card can be used just like a regular credit card you have the freedom to spend the money where you need to. It works with hotel reservations, airline ticket reservations, and on any other purchases you need to make.
• Safe- Prepaid credit cards are protected if they get lost or stolen. Simply make a call to the company and they will cancel the card and send out a new one.
• Great gift ideas and teaching tools- Prepaid gift cards make great gifts for everyone and can be used with children to teach them how to spend their money responsibly. You can monitor the balance and where the card is being used by going to your password protected website and reviewing the transaction history.
As you can see there are many advantages of prepaid credit cards. If you’ve had trouble qualifying for a regular credit card then you might want to try these out.