Prepaid or Preloaded Credit Cards

If you're frustrated because it seems as though a credit card is necessary to get by in today's world, and you've been unsuccessful getting one due to a poor credit history, you might consider a prepaid credit card. You'll have most of the advantages of a credit card, and you won't have to worry about interest charges. One significant benefit of the prepaid credit card is that you can charge to your heart's (I mean your deposit limit's) content, and you won't be in debt; the money is yours and once it's gone, you can't spend any more until you add more funds.

A prepaid credit card account is opened by depositing money into an account you establish with the card issuer, much in the same way you would make a deposit to open a checking or savings account. Once you fund the account with a designated amount, you are issued a prepaid credit card that can be used anywhere one would use a regular credit card. A prepaid credit card is not really a credit card, as no credit is offered by the card issuer; the card-holder simply spends money which has been "stored" via a prior deposit by the card-holder or someone else, such as a parent. It's very similar to using a debit card linked to a savings or checking account; there are no monthly bills associated with the card, or interest charges; but there are still fees involved, so consumers should always do their research and understand the cost of their "credit".

The reason why the word "credit" is associated with these prepaid cards is because most cards carry a credit-card brand (such as Visa or MasterCard) and can be used in similar ways. It's really no more than a stored value card that can be used in multiple locations due to the Visa (or other credit card) insignia. As more consumers require a suitable solution to rebuilding credit, recent changes have allowed some credit card companies to offer pre-paid credit cards to help rebuild credit. However, they are harder to find, and many have higher fees associated with them; so make sure you do your research. Many pre-paid products falsely claim they will improve your credit rating.

What are some of the Benefits of a Prepaid Credit Card?

• There is no such thing as overdrafting your account; you cannot exceed your limit.
• Prepaid credit cards can be a big advantage to low-income consumers who might otherwise be stuck dealing in cash, unable to make such basic transactions as paying for gas at the pump, paying bills online, or making car rental or hotel reservations.
• Contingent on the card you select, your money may be protected if your card is ever lost or stolen.
• Prepaid credit cards are a convenient way to pay for goods when traveling, even outside the U.S.
• Prepaid credit cards are often marketed to teenagers for shopping online without having their parents complete the transaction, or as a convenience for parents wishing to provide funds to children away from home.
• Obtaining a prepaid credit card is easy, fast, and requires no credit check.
• Some prepaid credit cards today report card history to major credit bureaus, so cardholders may be able to build or rebuild their credit using a prepaid credit card without the risk of damaging it along the way.

In summary, prepaid credit cards are a good solution for anyone who does not want to be tied down to a banking institution, anyone wanting a more secure way to carry their money than simply cash, or anyone having troubles being approved for a credit card. In today's society that is more and more cashless, somebody who doesn't have access to cashless transaction vehicles is at a major disadvantage.