Aren’t credit cards the worst? The hidden charges, the late payment fees and the embarrassment of it not working at the wrong time are something that we are all aware of. There is, however, a new solution to this problem; the prepaid debit card. Here are a few things to know about them.[irp]
1-Although the card is called a prepaid ‘credit’ card, it works like a debit card. You control the amount of money that the card holds. Even as you are spending, you are not borrowing the money but just using up the money you have deposited into the prepaid card. When your balance gets low, you can always recharge the card with more cash, or a bank transfer. These cards can be used where all major standard credit card companies are used. This includes MasterCard, Visa, and American Express etc.
2-For the many people who do not prefer to deal with credit cards, this card allows you to do stuff that requires a credit card, without owning one. This may include booking a room or renting a car. These cards can also have your paychecks directly transferred into them.
3-If your credit history is as bad as it gets, no need to worry, you can still own a credit card. Even though no bank would issue a credit card to someone with a bad credit rating, the prepaid card allows you to own one, without building up any credit. This allows those habitual big spenders to cut down on their card swipes and maybe save money rather than spend it.
4-Before applying for a prepaid card, make sure you compare different options being given by different prepaid card providers. Most these prepaid cards allow cash withdrawal from ATM’S, however, some even let you pay your bills online, pay off creditors (a check is sent by the company).
5-Reloading the card is very simple. You can load it in 4 ways which are; bank transfer; employers direct deposit paychecks; transferring money from a PayPal account, or you can visit any major retail store like Walgreens and Wal-Mart and have it recharged by a prepaid scratch card sort of thing which you usually get for your cell phones.
6-One should not think that by getting a prepaid card, they have escaped the fees and extra charges of the bank. This is because, in the case of credit cards, the interest on the debt is the revenue for the bank, however in prepaid cards, the fees are the revenue. You will be charged when the card is created when you deposit money when you withdraw cash from any ATM. Some even charge to check your balance online. Companies usually also charge a monthly fee, which is applicable whether the card is in active use or not.
7-The prepaid card offers the same protection against loss or theft as a regular credit card. If you report the incident to them immediately, they just cancel your old card and deposit your balance into a new card.