Pre Paid Credit Card

Pre Paid credit card is an interesting option in the credit card field. From the outside looking in they can look like a pointless card. After all, most of us have a debit card, which is rather how the prepaid card works. However, we are going to examine the purpose for these cards to help you understand why you might want one.

With a prepaid credit card you have to open an account in which you load with money. If there is no money in the account you can’t use the card. This is how it differs from a mainstream card that offers a credit limit. Since you don’t have a true credit limit you are setting up how much the card can be used for. This is a good thing. You have more control on the card. There is a start up fee, a transaction fee of 1 percent and a reload fee. These fees are what truly set it apart from a debit card, which is normally no cost to you with a current account.

So what other reasons do you have for wanting the prepaid card options?

This type of card is more convenient to some who need the control of a set limit
It can also help erase arrears on your credit. What we mean here is that when you have bad credit that you are trying to fix with a prepaid card, the company will report to the credit agencies that you are a favourable account holder, as long as you are. The other arrears will still show up on the account, but lenders can see how you are mending ways. You also get to increase your credit scores by using these cards. Debit cards don’t help you increase your credit score.
A pre paid credit card can be given to a student under the age of 18. Most credit card companies will not allow anyone under 18 to get a credit card. The student does have to have the parents as a co-signer on the account. They also get rewards for being top students as well as responsible.
Offering a prepaid card to a student or teenager may seem like a bad idea. However it does help to build credit for these individuals. It can also help to teach them responsibility with credit. The other reason for teenagers having the card is convenience. If you can’t make it to the store your teenager can get the items you need. It saves you time.

As you can see from out list above there are plenty of reasons to have a prepaid card in your wallet. They are also effective in limiting fraud as most fraudsters don’t go after prepaid cards since the limits are usually too low.

So if you want a card with more control, a few fees, and the ability to repair your credit with more ease then the prepaid option might be for you.