The idea of a prepaid credit card has been around for a number of years, but it’s only now, with the level of personal debt soaring, that it has really started to take off. www.prepaidgiftbalance
But what is a prepaid credit card? How does it work? And most importantly, can it help you avoid getting any deeper into debt?
The Basic Idea
If you’re familiar with the idea of a prepaid phone card or a prepaid gift card, the idea won’t be new to you. It’s basically just a credit card without the credit. You load money into your card account and can then spend it using your plastic card as you would with a normal credit card.
These prepaid credit cards are accepted by hundreds of thousands of retailers and online merchants.
Dozens of financial institutions offer prepaid accounts backed by either Visa and Mastercard so they can be used globally. In fact, anyone who accepts credit cards will be able to accept your prepaid card.
And the uses are almost endless;
Top up your cell phone
Pay your bills
Buy groceries and petrol
Book flights, hotels, tickets
Transfer money to family and friends
You can even withdraw cash from your account at millions of ATMs all around the globe
And once you’ve spent the money in your account, you can “recharge” it with more money.
The main benefit is that these cards are extremely flexible. You can load money onto your account using cash, bank transfer, or even using another credit card (but that’s probably best avoided if you want to avoid debt). And because most prepaid cards are backed by Visa or Mastercard, you can use them anywhere in the world as you would with a traditional credit card. In fact, the use of these cards is so similar to credit cards that they’re usually called prepaid credit cards, despite the fact that credit is not involved.
The only difference is that you have to fill up your account with your own money before you use your prepaid card, which brings us to the other main benefit. It’s impossible to get into debt using one of these cards, because if you don’t have any money in your card account, it won’t be accepted.
That gives you more control over your spending. It allows you to set a budget and put that amount in your account. There’s no risk of overspending on one of these cards, which is a major advantage if you’re trying to escape debt or are worried about getting into debt. And as with credit cards, you’ll receive a regular breakdown of your spending on the card, which is great for keeping track of your spending.
And because you’re not advanced any credit, there’s no interest to pay and no credit checks to get one of these accounts. That means everybody is eligible to get a prepaid card, even if you have a bad credit record.