Prepaid Credit Cards compared...

Experts are beginning to praise prepaid credit card companies which are taking consumers out of the red and into the black in what has been confirmed as one of the biggest benefits that the prepaid card market has to offer.

Some prepaid mastercard are being introduced solely for the purpose of supporting consumers with bad credit, as they are not accepted by credit card companies elsewhere.

There are a variety of strategies being used by bad credit card companies, including limits on expenditure and limits on the amount of load accepted on a card at any one time.

Statistics show that there are an increasing number of consumers who are deciding to have their wages transferred directly to their prepaid credit card.

Some consumers are taking advantage of the restriction that prepaid cards offer; the inability to go overdrawn means that budgeting is required. In turn, this is helping the average consumer to become more aware of what they can and can’t spend and most importantly, master the difference between want and need.

Prepaid credit cards offer a second chance. Many people are being turned down in credit card applications currently because of a lack of consistent repayments. The fact that no credit checks are conducted and even people with no credit history are applicable for a prepaid card means that disadvantaged consumers still have some financial freedom.

Away from those with bad credit, there are other consumers who are beginning to take control. With uncertainty in banks an all-time high and nationalisation all too common a phrase in the current economic climate, some people are beginning to consider prepaid cards as an alternative to a bank account.

One financier had this to say: “Avoiding credit card charges will save a lot of money in the long run during this time of recession.”

Even though credit card interest rates are beginning to fall, the amount of people who are failing to keep up with payments is slowly rising.

This is believed to be due to a number of factors, including redundancy and an over-reliance on the amount of credit somebody has on a card.

Finance experts are currently singing the praises of the prepaid card, which is allowing more and more people to only spend the money they have and to have a viable way to resist the temptation of relying on credit. With prepaid credit cards supported by well-known services like MasterCard, Maestro and Visa – they are also beginning to be accepted everywhere a card is.

Prepaid cards are one of the newest and most interesting financial products on the market, and they are something that everyone should be made aware of. However, many people do not know what prepaid cards are, and how they can benefit you. If you want to know more about prepaid cards, then here is some advice about their advantages and disadvantages.

What does prepaid mean?

Many of us have prepaid phone cards or SIM cards for our mobiles, but prepaid debit cards are quite a new idea. However, the concept is the same as other prepaid mediums, where you load money onto a card and then you can spend this money at retailers or withdraw the money at an ATM. You load money onto the card using cash, bank transfer or another card.

Are they credit or debit cards?

Prepaid cards are neither credit nor debit cards, but have features similar to both. These are VISA or MasterCard cards usually, and so have the wide usage and security features of a credit card. However, you are not borrowing money, simply using your own money to top up a card and spend on it. They are a financial product that falls in between debit and credit cards.

What are the advantages?

The major advantage of a prepaid card is that you can easily keep track of your spending and limit yourself to a certain level of spending each month. Also, you don't have to pay interest and don't have to go through credit checks to get one. All of the funds on the card are completely controlled by the amount of money you wish to put on it. This means there is no risk of borrowing too much and getting into debt.

Who should get a prepaid card?

Prepaid cards can be useful for anyone who wants to control their spending but still have the security and usage features of a credit card. Also, prepaid cards can be very useful for teenagers or children if they need a card. As a parent you can control their spending by only putting on a certain amount each week or month for them to spend, whilst still giving them the freedom and security to purchase items using plastic.

The costs of a prepaid card

Although prepaid cards have many advantages, they can cost you money through various charges and fees. Many prepaid cards carry an application charge as well as a monthly usage charge. If you are paying a monthly service charge, then you need to make sure that other services are given to you for this money, such as helplines or added security. Before getting a prepaid card, you should shop around to find the card that has the lowest fees. Although you are not paying interest, these fees can add up and if you don't use the card a lot could cost you more than you will end up spending. However, if you look around there are some good deals to be had. If you want to control your spending or your child's then getting a prepaid card might be the answer.