Save Money When Looking for Prepaid Credit Cards
You will definitely save money when looking for prepaid credit cards. When compared to standard buy now-pay later credit accounts, prepaid cards are inexpensive to use. There are no interest charges, no late fees and no over limit fees associated with prepaid credit cards. That is because you pay in advanced by placing cash on the account and then you use your prepaid credit card just as you would any other plastic payment card.
The difference, of course, is that you are spending money that is already paid. You have increased security of using a credit card rather than carrying cash that might be lost or stolen.
You cannot go over your spending limit as the limit is the amount of money you have used to fund your prepaid credit card. There is no interest to be paid as finance charges because you are using your own funds when you make a purchase. You are not borrowing money from a lender that must trust you to pay your debt when due.
Original Prepaid Credit Cards
Until recently, those who wanted to save money when looking for prepaid credit cards were interested in these accounts for only two reasons. The first was for use as a gift card and the second was to give the appearance of having a credit card for those who could not qualify for credit accounts.
Gift cards have long been offered by department stores and specialty stores. Large restaurant chains from fancy seafood to burger joints often advertise their gift cards around the holidays as the perfect gift for family and friends. When you are looking for prepaid credit cards, a search will also result in gift card offers.
The popularity of giving a cash card for birthdays and holidays led major banks to offer their own gift cards that could be used for almost any purchase the recipient wanted to make. These cards carried Visa, MasterCard or American Express logos and could be used for a variety of merchant options.
Many gift cards had no fees attached as the merchant's card was limited to items bought at the store where the gift card was purchased. One small trick that was practiced was that gift cards were only valid for a certain amount of time.
If the recipient did not use the card within six months, he might find the dollars placed on the card could no longer be used. That hidden fee was a boon for merchants as they confiscated the unused funds from expired gift cards.
Prepaid credit cards were only used by those consumers who could not qualify for a standard credit account. The first prepaid credit cards were clearly identified as "pre paid" and not all merchants would accept those for payment.
At the time, only people who could not obtain standard credit cards had any interest in using a prepaid account. Presenting a prepaid credit card for payment labeled you as someone with bad credit.
Increased Acceptance
The explosion of the World Wide Web transformed the prepaid credit card industry. New payment processes made it possible for consumers to buy items online from the comfort of their home.
At the same time, people were reluctant to post personal financial information online. There was fear that posting the information on your credit card on a website might leave you open to identity theft or unauthorized charges on your account.
Prepaid credit cards were the logical answer to these concerns. You save money when looking for prepaid credit cards no matter which lender's prepaid option you choose. Although the prepaid accounts are not reported to credit bureaus and won't help build a good credit report, they are an excellent way to buy what you need without over spending.
Summary
Consumers who use prepaid credit cards today are considered financially savvy people who are avoiding the high fees of standard credit lenders. The prepaid card is tied only to the funds placed on the card by the consumer and the card is not tied to your bank account or credit information in any way.
You can save money when looking for prepaid credit cards. The terms of use should be simple without any hidden fees. The only fees you are likely to pay are a fee of $3-5 when you add funds to the prepaid account and a monthly maintenance fee of $3-5. Clearly, this is a much cheaper and safer option than using standard credit card accounts.