If you have a history of bad credit and are unable to obtain a mainstream credit card, then prepaid credit cards may be just the answer you are looking for.
First of all, although prepaid credit cards are accepted at any retail outlet where the credit card logo is displayed, strictly speaking they are not a ‘credit' card, as the issuer provides no credit facility to you. Rather, your spending limit is determined by how much money you have on the credit card at any given time.
Once the amount on the card has been spent, the cardholder can either buy a new prepaid credit card or elect to transfer money on to the existing card, depending on the card program.
Although prepaid credit cards sound very like debit credit cards, the two should not be confused. In the case of debit cards, any purchase for goods or services you make will automatically be charged to you bank account – for which the debit credit card has been issued. However, purchases for goods or services made on prepaid cards goes off the balance already on the card.
Because of the prepaid nature of these cards, they have several benefits, such as:
· no interest is charged
· they give people with a bad credit history the option to
use a credit card
· the ‘credit' line is variable depending on the amount on the balance of the card
That said, you still need to review the terms and conditions of the application form carefully as prepaid credit cards can have
· a monthly membership fee
· an application fee
· a purchase fee
· a monthly transaction limit fee, i.e. if you spend over a fixed amount each month you are charged a fee for any additional transactions
· a fee if you use the card to make ATM withdrawals
Nonetheless, the card is a superb option if you either cannot obtain a regular credit card or are tired of all the fees and interest charges that are normally associated with standard credit card. |
Author Info:
Joseph Kenny is the webmaster of the UK credit card comparison site http://www.creditcards121.com/ , where you can find a selection of credit card advice . For US visitors there is also the comparison site http://www.credit-cards-info.com/ for all US interest free offers.
Readers please note : You should undertake your own background checks before taking any action on any aspect mentioned in this article. Where the author has mentioned specific product details or given examples of how companies have reacted to specific situations, these should be correct as far as the author is aware when this article was written. In some cases additional background information not mentioned in the article has been used in obtaining the examples. Some examples or quotes may have been taken from information available in the public domain where all the background details may not be available. Insurers do change policy conditions and underwriting approach. They will view each situation on its own merits.
You should be aware that details of the topics written about within the articles can change. Therefore, always check out the current position before taking any action. You should also check that any action you are considering, or any proposed purchase, is suitable for your personal circumstances.
This article represents the author's personal views and is not necessarily endorsed by this web site. These articles should not be construed as this web site recommending any product or service.
|