The benefits of prepaid credit cards far outweigh the drawbacks. When was the last time you reluctantly opened your regular high interest credit card only to find hundreds of dollars of purchases you didn’t plan for and now must settle for paying the minimum amount due?
This is how so many people get caught in the trap of credit card debt, but with a prepaid credit card you can avoid this pitfall.
A prepaid credit card operates like a regular credit card, except once the funds are all used up the card becomes inactive until more money is deposited on the card. There are many benefits to owning a prepaid credit card and perhaps the best reason to own one is the flexibility. Money can be added to a card from a variety of sources including your bank account, cash, or from another credit card. Prepaid credit cards are accepted all over the world just like a regular credit card.
Many people prefer prepaid credit cards because using one will help you avoid debt and control spending. Just like a regular credit card a breakdown of expenditures is available to you so that you can monitor where your money is going. Other benefits are that they are available to everyone, even if you have bad credit. There are no high interest rates to contend with, so the card can be used until the funds are gone.
It can also be very beneficial if you are traveling abroad. These cards are accepted worldwide and cash can be withdrawn from millions of ATMs. There are some prepaid cards that allow you to take advantage of the foreign exchange services without paying any additional fees.
Also, similar to a regular credit card, a prepaid card is protected by most companies from fraud. If you lose your card or it is used by someone else without your consent the provider will cover the loss. Using a prepaid card is safer than carrying cash especially if you are traveling.
If you have a teenager, a prepaid credit card will help them make safer financial decisions and give you some control over their spending. Starting a young adult with a prepaid credit is a great way to introduce him or her to using credit without spending frivolously. You can monitor your child’s spending habits and help them understand fiscal responsibility without running into the problem of over spending and paying off high interest rates.
The benefits of this card far outweigh the disadvantages. Whether this is your first time with credit or you are simply trying to manage your spending, a prepaid credit card will protect you from the pitfalls associated with owning a regular credit card.
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