Defining the Prepaid Credit Card

Defining the Prepaid Credit Card

The definition of a prepaid credit card is: A payment card (usually MasterCard, Maestro, Visa Electron or Amex), pre-loaded with your own money, which you can then use wherever the payment card is accepted, including on the internet and abroad. A prepaid card is much like the gift cards available from most high street chains in the UK, however, prepaid cards have a much wider acceptance, and can be used internationally. They are the same as credit cards, but without the credit. The majority of UK prepaid card providers offer cards embossed with your own name, and some are even CHIP & PIN cards.

Whilst prepaid credit cards can be a very useful product for those with a good credit rating, many card providers target their prepaid products at those with bad or no credit history. With the number of IVA\’s (Individual Voluntary Arrangement) and bankruptcy cases on the increase, there is a growing population in the UK that are unable to get a traditional credit or debit card, without paying extremely high fees.

Considering what a credit card is, the term “prepaid credit card” can be a little misleading. With a prepaid credit card there is no credit being issued to the cardholder. Instead it works much like a checking account where the cardholder deposit funds into an account and as the card is used the funds are automatically withdrawn. Because having a prepaid credit card is similar to a checking account the benefits may not be obvious. Below are some reasons why a prepaid credit card can benefit you.

With the increasing threat of identity theft and the horrors stories one hears from friends or family members that have fallen victim a prepaid credit card can add a level of security by limiting the damage. You can keep your main bank accounts information safer by using a prepaid credit card for online, over the phone, and local market transactions.

A prepaid card works a lot like a gift card with little perks that make it so much better. And everyone is instantly approved.

Your Wired Plastic prepaid card works wherever a visas or master cards are accepted, even gas pumps. With your wired plastic prepaid card you earn points for every dollar that you spend on your card just like you do with other credit cards. Just load, and reload your card as needed.

Many people are concerned that fees must be paid for prepaid credit card fees and these may be excessive.

Use of one prepaid card we heard of recently is subject to a charge, of 2.00 for every ATM withdrawal, 1.00 for every signature purchase and 2.00 for every PIN purchase. Also, they charge 1.00 for all online purchases. The alternative to these charges is to pay a monthly fee.

Of course, instead of buying a pre-paid credit card, you could open up a bank account. That way, you would at least get a debit card linked to your account.

So if you do not want to pay those sorts of charges you can drop that card right now. Take your money and go to a bank like Wells Fargo or WAMU and open a secured Credit Card. You\’ll have to put your money down right then and there (typical minimum is 0) into a locked account. They will then open a Credit Card for you with a maximum of that amount.

A prepaid credit card will act just like a credit card. Online shopping, swiping at the gas pump, and all those other credit items will work fine, so for many with no credit rating there is no real choice but this type of card transaction.

If you have no credit or bad credit then this is what you have to deal with for a while. The fees we have described are not too out off the normal, but they can add up. Do you best to pay the bill on time every month and don\’t max out the prepaid card or you’ll go hungry! In about 6 months you can apply for a better card and stop using that one. By the way to do best at raising your credit rating don\’t close a card account. Just leave it open. The more you open and close cards it looks bad to the credit rating system.