One answer to the problem which is proving very popular due to its easy availability and usefulness is the prepaid credit card. If you are looking for information on this extremely handy little piece of plastic then you have come to the right place.

Who Can Apply For A Prepaid Credit Card?

They can be applied for by anyone and because there are no credit checks carried out you have no worries of being rejected.

Can I top it up from my Bank Account?

Yes, you can also top them up online, at your local post office and wherever you see the PayPoint logo.

Can I Use A Prepaid Card Just Like Any Other Credit Card?

Yes, you just have to load the card up with your own cash and you can use it in exactly the same as you would a normal Visa or Mastercard. The cards only contain the money you put on them so any damage done if the card is stolen is limited unlike with regular plastic and you don’t have to worry about the extremely high regular credit card interest rates.

How Much Do They Cost?

Prices vary depending on the lender and the particular card you choose but expect to pay around £10 to buy your card in the first place and then another fee for each transaction. The price of top ups depends on where you get them, most are free but you may be expected to paya  small fee using certain methods.

Can I Use It To Buy Goods On The Internet?

Yes, the prepaid credit card actually has some advantages of some other methods of paying of products online. Given that that there is only a limited amount of money on the card there is very little financial damage that can be done to you in the event of fraud.

Does It Have Any Benefits Over A Debit Card?

The prepaid card is accepted in more places so having one will give you greater variety in the number of places you can shop. Also, you can get overdrawn with a debit card which can lead to additional expensive charges.

Some prepaid credit cards also have credit reporting facilities to help you demonstrate your credit history with some issuers reporting your monthly payments on cable, utilities and rent. With your prepaid cards, you might be charged a nominal fee in monthly installments and your card company would inform these installment payments to the credit bureaus. This helps you form a good credit payment history.

What are the benefits offered by the prepaid credit card?

Given below are some important benefits offered by pre paid credit cards that play an important role in paying off debt and making you debt free:

1. No credit card debt is accumulated

   As you’re prepaying your purchases with the help of a prepaid card, you’re not piling up a huge amount of credit that you might not be able to pay off in the future. You can make the need to settle credit card debt a thing of the past, which will relieve you of much of the stress associated with managing your finances.

2. No interest is charged on purchases

   When you use prepaid credit cards, your purchases are debited from the funds that you loaded on those cards. This is different from typical credit cards where everything you buy is subject to daily interest costs till you pay them off.

3. Designed for a student budget

   Some prepaid student credit cards can help you check your spending so that you can stay within your budget. Because you’d require cash available for prepaying your card, the cash you can load on your prepaid card must be only with what you can manage to spend.

4. Protection from over the limit and overdraft fees

   Though there are rare occasions where a manual or preauthorized deal might put you over your available balance on a prepaid credit card, most of the time, you wouldn’t be allowed to spend in excess of what is loaded on your card. This suggests that you can steer clear of costly overdraft fees and over the limit fees that often make your debt burden heavier.

Selecting the right prepaid credit card

Similar to many options that come with standard credit cards, prepaid cards can have various benefits, fees and features. It is always better to explore all your options to get the card that is most suitable for you. While selecting a card, you should compare the following elements:

• Card fees (reload fees, usage fees, setup or activation fees and inactivity fees)
• Reloading options
• Credit reporting features
• Load, spending and card limits
• ATM and cash withdrawal limits

The approval process for a prepaid visa card is simple and there is no necessity of a credit check. The cards can be reloaded online within minutes. However, the application fee is somewhat higher than usual credit cards.