Pros and Cons of Prepaid Credit Cards
Most people are driven to apply for prepaid credit cards due to the rejection they receive on account of bad credit scores. But credit cards facilitate almost all commercial transactions of the modern society. Many commercial institutions even require presentation or possession of credit cards prior to accommodation. Because there are loopholes in credit card applications, credit institutions have devised another way to facilitate credit—prepaid credit cards.
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Pros of Prepaid Credit Cards
For those who have been denied their credit card applications, prepaid credit card is the next best option. Aside from being easier to avail, prepaid credit cards work in a way that offers more convenience to the user. This type of card is reloadable in an amount preferred by the user or the account holder. One of the best advantages of this card is you can only spend up to the amount loaded to the card. This way, you are avoiding debt and unwanted billing statements. Another advantage is the opportunity to spend money prior to your purchase.
Through prepaid credit cards, you are spared from late fees and charge backs from online transactions. This type of credit card also helps you curb your spending to a certain degree. If you have used up all the balance in your prepaid card, it becomes inoperative for next purchases unless you reload it. This helps you become more disciplined in your expenses. Prepaid credit cards are ideal for young adults. This gives them a sense of freedom to decide on their purchases and the opportunity to try making wise financial decisions. At least, excessive spending can be curbed while young adults are trying their wings on making financial decisions. This also limits children’s usage as parents can set the maximum amount to load in the card.
Prepaid credit cards are also ideal gift items. You, as a giver, can be spared from the agony of pondering on gift choices as you are providing the receiver the power to choose his or her preferred gift. These cards are also easy to use. Almost all stores which accommodate credit card payments also extend the same accommodation for prepaid credit cards. Hence, these are easy to use. Prepaid credit cards can also assist the user or owner in building a good credit score. By establishing reputation on prepaid credit cards, your credit score will improve. But you have to make sure that the company you availed the card from is supported by a credit report agency and such will reflect on your credit history.
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Cons of Prepaid Credit Cards
One of the setbacks in availing prepaid credit cards is the application fees that come with it. Just like an ordinary credit card, prepaid credit cards will entail you to shell out cash for set up fees and maintenance. Paying taxes on the reloaded amount is also required. Just like a credit card, the prepaid ones will require you to pay periodic membership fees. Another disadvantage is the limited online usage. If you have plans on purchasing something online or on a monthly subscription, prepaid credit cards will not be sufficient. There are online merchants who refuse to accommodate prepaid credit cards for the reason that succeeding months will not be sufficiently covered. For actual stores, there are some that refuse to accept prepaid cards. In this case, it is important to carry extra cash because you face the risk of conditional refusal from merchant stores.
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List of reputable prepaid credit cards
Vision Premier Prepaid Visa Card (Free With Direct Deposit)
$0 activation fee with mail in rebate
$0 weekly fee—with direct deposit
Guaranteed approval; no credit check
Free direct deposit and unlimited purchase transactions
SilverCard Prepaid Master Card
Perfect card for government/benefits check recipients
$0 activation fee with rebate
Free customer service
AccountNow Prepaid Visa Card
$0 activation fee with rebate
100% guaranteed approval
No overdraft fees or minimum balance required
Now with iAdavance loan option
AllAccess Prepaid Master Card
No monthly fee
100% approved with no credit check
No upfront payment and no minimum balance
$10,000 reload capacity nationwide