Prepaid credit cards - the credit card without debt

Prepaid credit cards - the credit card without debt

In the past, if you had a bad credit history then you were unlikely to be able to get a credit card. However, prepaid credit cards are becoming increasingly available, and it doesn't matter if you have had financial problems in the past. Although know

n as 'prepaid credit cards' these latest cards are in reality a form of debit card. There is no credit offered, just the advantage of being able to use plastic rather than cash. This is helpful for transactions on the internet, booking holidays and hotels and transferring money.

Application process
Applying for a prepaid credit card is easy as there are no credit searches necessary, because the card providers are nor offering you credit! The application is usually fairly quick and simple and in some cases the card issuers offer 100 per cent acceptance - you don't even need to be 18 with some companies.

Prepaid credit card uses
Not only can a prepaid card enable customers who found it hard to get credit, but this type of card can help you take control of your finances, if you have found normal credit card interest rates too high and the balance offered too tempting. You can be confident that you will stick to your budget with a pre-paid card, as yo

u are the one who sets it by deciding how much to top-up your card with!

Most prepaid credit cards can enable you to:
No longer have to carry cash when shopping
Use an ATM to withdraw money - at home and abroad
Transfer funds - send money to other cardholders
Shop on the internet with security
Top up your mobile phone
Have an additional prepaid credit card for family use - useful for a teenager for emergency use (usually 13 years plus for a named card holder)

Pre-loading your card
You will need to pre-load your card before use and this can be done in different ways:
by direct transfer from a bank account, or by paying in cash at a nominated outlet. The prepaid credit card is accepted in most of the ways that a normal card is, but unlike a credit card because you pay before you make a purchase, you can't exceed your credit limit.

Prepaid credit card fees and security
Check carefully before signing up that there are no hidden charges. Firstly, is there a fee for opening a card account? Are there any monthly or annual service charges? Are there any charges when you top-up, such as with a direct deposit reload or bank account reload? Are there withdrawal fees if you use ATMs? Also find out whether there are fees when you use your prepaid card for purchases with a merchant or online. All these charges can mount up and as there are now more prepaid cards becoming available, with the increased competition not all card providers are charging fees. Compare the various card options, it's easy with an online comparison site and can save you money. It is advisable to find out what protection the card company offers you, such as if you have a stolen or lost card, or if something goes wrong with your purchase? Also is there a 24 hour helpline?

If you tend to overspend or have had credit problems, then a prepaid credit card can be the best choice for you. This card has all the convenience of a credit card, but without the risks or debt worry.
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Fiona Howard specializes in writing for the financial and business market, and is a well-respected city analyst. She currently advises Loan-Loans-Mortgage, one of the leading UK online sites for finding out about loans and credit cards

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