The prepaid credit card – what is it?

The prepaid credit card is not really a credit card at all, but a prepaid card. However, it is often called the former due to its similarities of use with a credit card.

The traditional credit card

The ordinary credit card has been around a long time now and is probably well known to all.

To all intents and purposes it is a form of credit that you can spend through the electronic use of your credit card.

The conventional card typically: has a pre-set credit limit, is offered based upon your earnings level and very probably your credit history, will incur interest charges for you if you do not pay back the spending at the end of the month.

Some credit card use may be controversial and has been the subject of speculation regarding its affects on encouraging debt.

The prepaid credit card

This is an entirely different approach.

These prepay cards work on the basis that you place money onto them. That can be done via a PayPal outlet or via a bank transfer from your own bank account. If you have an active card, a payday loan from lender can be used to top up your card.

Once a prepaid card has been loaded with an amount, you can use the card as per a normal credit card but you can only spend up to the amount you’ve loaded onto it.

Advantages

This form of card means that: typically you can’t run-up debts on it, as there are no credits or debts involved, the providers typically don’t need to make credit checks on your background, may be useful for people who have been declined a credit card previously, as your card is PIN-protected, it’s safer than cash, you can use it at many ATMs both in the USA and abroad, you could give it to older children for controlled spending.

Some providers of these cards may also offer a supporting e-bank facility. This means that you could have your salary paid into this account and then download portions of it directly onto your card as required.

Using

In the modern world, it’s becoming increasingly difficult to survive without having a method of paying that involves a plastic card.

Paying via the internet or using automated ticket machines are just two examples of where cash and cheques may prove to be useless.

A prepaid credit card may allow you to take advantage of the modern information technology based society without the potential hassle and temptation to overspend often associated with a conventional credit card.

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