What is a Prepaid Credit Card?

Prepaid credit cards remain shrouded in no small amount of mystery. A lot of people don’t know what they are, and those who do are often confused as to how or why they should be used instead of a plain debit or credit card. It’s simpler than you think, though. Read on for the low-down on these pre-paid keys to the world.

Credit cards require something a prepaid credit card simply doesn’t. A credit check. As you are generally placed in a position of trust by your bank or credit card provider, they will require a credit check and will base a lot of decisions on the results. This ranges from your ability to have a credit card at all, to the amount of credit you are able to receive and even the interest rate you can expect to pay.

Debit cards are very different, but even so; to get a bank account you will need to pass that credit check.

Cash is a viable alternative – or is it? When you plan to spend a few hundred dollars or want to buy something online, cash does you no good whatsoever as the risk of loss or theft, and the inability to pay via cash online stops you from partaking of either in a safe and sensible manner. This is where the prepaid credit card comes in.

As all the funds on your prepaid credit card are pre-loaded by yourself, you will be exempt from credit checks and won’t owe any interest as you would on a conventional credit card. All you have to pay is a small fee for the card itself and, in some cases, a monthly fee. ATMs can incur a small charge as well, but as they do so when you use a traditional credit card it is no big surprise.

Aside from online purchases and the convenience of carrying around a lot of money in the form of a PIN-protected piece of plastic, you can use pre-paid credit cards for travel. They allow you to take as much as you want without risking pickpockets, and most companies offering pre-loaded credit cards will have special procedures in place to ensure you can expect a replacement without delay. As such they are also the ideal way to ensure your child has spending money during a lengthy trip abroad. You can top off the pre-paid credit card from home, even meting out the money to avoid any unpleasant phone-calls claiming the entire budget was mysteriously spent, and know they are safely spending on their holiday without the added risk of carrying cash.

So there you have it; the pre-paid credit card is a fantastic option for spending at home and abroad. With it by your side you can expect to enjoy all the comforts of having a credit card without worrying about a credit check at all.

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