Prepaid Credit Cards are just like credit cards except that they can only be used when the funds have been loaded on the cards by the cardholder themselves prior to usage. So in that sense, they are actually completely different from the traditional credit cards and debit cards which we are used to seeing in day to day life.
Typically, you need to add funds on the card before you can access those funds and most prepaid cards usually have some fees attached to them. Furthermore, they really do not provide any credit whatsoever. So if you are looking for a credit facility or access to additional funds, these cards really are not for you. So with the fees, it may almost seem that you are borrowing your own money at a cost – so the overriding question would be – why would anyone really need prepaid credit cards?
Why You May Benefit From Prepaid Credit Cards
- Prepaid Credit Cards Provide Access: Not everyone qualifies for credit and debit cards because of their credit history or their social status or because of CCJ’s. Prepaid credit cards can provide such individuals with access to electronic payment devices in the form of prepaid credit cards which thus gives them access to services and purchase options which they would not have normally had access to otherwise. This means that these individuals now have access to online shopping, internet purchases, discounts for electronic purchases and other such similar offers.
- Ability to Improve Credit History using Credit Builder and Credit Booster Tools: Whilst this has been quite prevalent with Prepaid Credit Cards in the US, this is something which is becoming more popular in the UK as well. A few prepaid card providers now have relationship with credit reporting agencies such as Experian and Credit Expert and provide features which allow cardholders to build their credit history. Of course, misuse can result in you actually making it worse too.
- Prepaid Credit Cards Provide Enhanced Security: Prepaid credit cards usually have lower limits when compared to credit and debit cards and they are not linked to your bank account which means if your card security was comprised, the losses would be limited to the amount that is usually held on the card. So in essence, they do limit your exposure to fraud.
- Prepaid Cards Can Help With Budgeting: Prepaid Credit Cards can be used as a tool to help teenagers and kids learn to budget and manage their finances responsibly. Also great for avoiding impulse purchases as funds on your card are limited.
- Prepay Cards are Great for Travel: Foreign Exchange rates on prepaid travel cards are usually 8-10% better than what you could get on the high street or the airport which means 10% more spend money in your pocket.
Why You Do NOT Need a Prepaid Credit Card
Well, if you have an excellent credit history and already have access to electronic payment resources such as credit and debit cards, you may decide that prepaid credit cards is really not for you. Perhaps you are more risk taking and less risk averse than the average individual and given the lack of that need for access, you may just decide that Prepaid Credit Cards simply do not tickle your fancy.
Find out more about the benefits and uses of prepaid credit cards and find the best prepaid credit cards at Prepaid365 – the UK’s leading prepaid card comparison site. Review and compare prepaid cards across the UK.
Find the right prepaid card for you
Visit out consumer prepaid card comparison section to find the best prepaid card to suit your needs. If you wish to use a prepaid card for your business, visit our business prepaid card section.