A Credit-free Card: What Is A Prepaid Credit Card?

In this high-tech era of computers and machines, the purchasing
power of people is mostly based on credit. Nowadays, credit
cards are almost indispensable in almost any business
transaction. For one, nobody can purchase anything online
without a credit card.

People who have a poor credit history though, will have a hard
time getting or renewing their credit cards. This is where
prepaid credit becomes useful.

There are lenders that offer prepaid MasterCards and/or prepaid
Visa Cards. Both these cards can be used like a regular credit
card. It is even hard to distinguish which card is prepaid or
not, by simply looking at it or even using it.

This is basically how prepaid credit cards work. When an account
is opened, the card should be "pre-loaded" with cash up-front.
This is like paying for a pre-paid calling card. Prepaid
MasterCards or Visas can be used anywhere as long as these cards
are accepted.

The prepaid credit card advantage:

1. Prepaid credit card can be easily obtained. It can be
purchased online or in local retail stores. It does not require
any credit check or proof of income.

The only thing to do is to fill out an application, pay a small
fee for setting-up the account and load the card with cash. The
amount of cash loaded will be the "credit limit"

2. No interest charges.

When a prepaid MasterCard or prepaid Visa is used, there is no
interest charge unlike the regular credit card. The reason for
this is that the money used is the owner's actual money
therefore no interest is needed.

3. Prepaid credit cards are free from financial or credit
problems.

4. Prepaid cards can be used almost anywhere. Prepaid
MasterCards and Visa cards are almost accepted anywhere in the
world.

Disadvantages of Prepaid Credit Cards:

1. Usually a set-up fee of 5 to 50 dollars is needed when an
account is opened. Then another fee of $5 or more is paid every
time more money is loaded onto the card.

Regular credit cards usually do not charge a set-up fee or
annual fees.

2. Cash up front is needed before any purchase could be made
with the prepaid card. This could be an advantage since
compulsive spending can be avoided.

3. There are some prepaid credit cards that cannot be used to
pay regular payments such as monthly electric consumption or
online services.

The Conclusion:

The prepaid credit card is a definite help for people who have
past credit problems. It is just a matter of choosing the right
prepaid credit card that suits ones' needs.