Prepaid Credit Cards
Prepaid cards work like any other credit card – however, the card user must load funds before the card is swiped. A conventional credit card “lends” money to users, while a prepaid card makes them pay for their purchases in advance. The most popular prepaid cards in the market are Visa and Master prepaid credit cards. The biggest advantage of a prepaid credit card is that it does not allow users to overdraw or get into debt, and therefore learn financial discipline and build up a good credit history.
How does a prepaid credit card work?
Well, it’s really simple. All the user has to do is load the amount on his card by transferring it from his bank account or depositing cash. The user can then swipe the credit card around just like a regular credit or debit card until his deposit runs out. He then has to re-load it as per his requirements.
Advantages of prepaid credit cards
Prepaid credit cards help the cardholder learn about the value and importance of money. The cards teach him financial discipline and give him control over his spending. These cards are safer than the regular debit or credit card because the maximum loss is limited to the amount of the deposit, which can be very small. They work great for students as well – parents can gift their children with a prepaid credit card and allow him to build his credit history from a young age. Moreover, banks do not perform credit checks while issuing such cards. Prepaid credit cards can also be used globally.
How to choose a prepaid credit card?
There are many types of Master and Visa prepaid credit cards around. Users must check their features and figure out which of the following factors matter to them the most:
1. Online account management
2. Easy and convenient ways of re-loading the card.
3. Fees (must be low)
4. How the card usage benefits the user. For example, global travelers can choose a prepaid credit card that carries very low foreign exchange fees.
Prepaid credit cards work the best as a gift – for example, gifting a loaded Visa prepaid card to someone on his birthday will make him happier than getting a conventional gift. Such cards also work very well for overseas travelers who can use card instead of cash. A prepaid credit card can be blocked if it’s stolen, so travelers need not worry about theft. Parents can gift a prepaid card to their children and monitor its spends. Such cards also work great for people who want to learn financial discipline, rebuild credit or cannot open a bank account. People who are concerned about money management can use different prepaid credit cards for different expenses like shopping, travel, on-line usage, business, etc.
As stated above, the most popular prepaid credit cards in the market are Master and Visa prepaid credit cards. These cards are getting increasingly popular by the day and if any of the situations mentioned above apply to you, you must act immediately and obtain a suitable prepaid credit card.