Prepaid Credit Cards Are Basically Debit Cards

Category: Finance, Credit.

In the original sense of the term prepaid cards are really not credit cards. Prepaid credit cards are basically debit cards.

But, by usage and by the way it works, it is referred as prepaid credit cards. They come handy when one finds it difficult to get their firs credit card application approved. In such situations prepaid credit cards bridges the gap. It is a difficult marathon for many to get a credit card because of the formalities involved and because of the good credit standing requirements. The only difference between the prepaid credit cards and regular cards is that, in case of credit cards you pay your monthly bills after you make your purchases but for a pre paid card you deposit the money that you plan to spend in a bank account that will be linked to your card. There is no danger of overspending and entering into bad debt here. In case of pre paid cards you set your credit limit by depositing the amount you wish.

It can be used the same way you will use your regular credit cards, to shop for good in shops and online, pay your bills and get cash advance in ATMs. Your money is safe and it is more secure in the banks than carrying it around. There are people who do not like to use a credit card by principle, but they too can use pre paid cards because of the convenience factors. Even if you lose your prepaid credit card the loss may be avoided by deactivating the card which may not be the case if you carry cash in your pockets, once lost you have very little chance of recovering the money. All that you need to do is to provide proofs for your identity and address. The process of getting a pre paid card is simple and fast. You can get your prepaid cards from certain stores or directly from banks.

Like regular credit cards, prepaid cards too expire. You may have to pay a basic fee to use the pre paid card. When they expire you will be able to transfer the money remaining in your card to the new card. As you can expect you will find a number of schemes that you can benefit from. Like regular cards, there are a number of companies that issue pre paid credit cards. However, you will not get your rewards as you do with your regular cards. In case of secured cards you still need to go through all the procedural formalities to get your cards.

Sometimes people get confused with prepaid cards and secured cards. For secured cards you pay a safety deposit that will serve as your credit limit but other than that you will be using it as regular credit card and paying your monthly credit bills. Every time you deposit money you will be paying service charge and this will be the fee you will be paying for the safety that you enjoy. Prepaids on the other hand like calling cards can be attained from retail stores but you need to keep depositing the money that you will be using in the future. Summary: Prepaid credit cards are easy to get and they bridge the gap for normal cards. You will be paying a nominal fee to use this service but other than that it operates more or less like a normal card, except that you will not get your monthly statement and you set your credit limit yourself for your card.

You have greater control over the money you spend by using a pre paid credit card. No more surprises and no more shocks.

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