Qualifying for a credit card can be a nightmare sometimes. In order to get a credit card with low interest rates and few fees you need to have established good credit; and that can take years to do. In today’s world a credit card is more convenient and almost necessary. If you’ve had problems qualifying for a traditional credit card then you might want to consider a prepaid credit card. Here’s how a prepaid card works and why it might be beneficial to you.
What is a prepaid credit card and how does it work
A prepaid credit card looks and feels the same as a regular credit card but instead of borrowing money from a bank or credit company the money you use is your own. They work in much the same way as a prepaid calling card. When you purchase a prepaid credit card you are in control of how much money you load onto it. It is unlike a regular credit card in that each purchase is deducted from the prepaid balance on the card and there are never any interest charges, late fees, or accumulation of debt. Prepaid credit cards are accepted everywhere that Visa or MasterCard are accepted, can be used to withdraw cash from an ATM and are reloadable.
Who might want or need a prepaid credit card?
Prepaid credit cards are becoming more popular today and there are many people you might benefit from them. Those who want to limit their spending, teach kids how to budget, those with damaged or not credit history and those who don’t every want to overspend. Let’s take a closer look at some types of people that might want to use a prepaid credit card:
Parents- Since using a prepaid credit card can be a great teaching tool many parents have taken advantage of them. Balances and spending limits can be monitored so you can feel safer allowing a teen to use a card like this. You can use them to teach your children how to budget and take care of their finances.
Students- Students can also benefit from prepaid credit cards as they can help them learn good money management skills. They’re convenient and can give you the independence you want while being able to control your spending limits.
Individuals with bad or no credit history- Having bad credit or none at all can take its toll on you, especially when you’re trying to build or rebuild your credit. A prepaid credit card offers one of the easiest ways to establish or reestablish the credit you need to qualify for a regular credit card. You’re always 100% approved and there is no credit check needed or employment verification. All you need is the money to put on the card
Individuals who want to stay in their budget- If the amount of debt you have is getting to be more than you can handle because of overuse with credit cards a prepaid credit card is perfect for you. It can help you stay in control of your spending and can get you back on track. You decide how much money goes onto the card and when you’ve spent it all it’s gone. There’s no way you can spend more than what you have. If you’re looking to stay within a budget then prepaid cards are the answer for you.
So now that you have a better idea of how a prepaid card works you can make a better decision on whether or not one will work for your needs. There are several different kinds available; ask your bank to share their options with you.