Prepaid credit cards are quickly becoming a popular way of managing money without the usual risks associated with standard credit cards.
What are Prepaid Credit Cards?
As is suggested by the name, a prepaid credit card is not like the usual types of credit card. With those, the cardholder can pay for goods or services using credit which would need to be paid back at some future point, with interest added on if the debt lasts past the card’s interest free period. Instead, pre pay credit cards are initially loaded with funds, and once the money is spent the card is unusable until it is topped up again. These cards enable a person to make credit card payments in most shops and cash machines but without having to go to the trouble of taking out a standard credit card or opening up a current account. Cardholders will more than likely use their prepaid credit card online as there is now no way around paying for some items other than over the internet: when doing so, they will be safe in the knowledge that a fraudster cannot run up credit at their expense if their card details are stolen.
Prepaid Credit Cards for Teenagers
The type of people these pre pay credit card products are aimed at are primarily younger people. Many prepaid credit cards allow anyone over 13 to apply, which can be beneficial for learning about money management at an early age. They allow young people to spend money with supervision, as it can be arranged that any credit card statements will also go to the parent (or whoever else has loaded funds onto the card for them).
There are many other varieties of pre pay credit cards available, including those that act as gift cards, travel cards for spending money abroad and virtual cards specifically for online use.
Prepaid Business Credit Cards
These financial products can also be of great use to those in business. Prepaid business credit cards allow a company to keep a tighter rein on its business’ and employees’ spending. Instead of employees submitting an expense claim at the end of a job, a prepaid business credit card would work as a simple alternative to control how much an employee spends.
Applying for Prepaid Credit Cards
Applicants can obtain prepaid credit cards on the World Wide Web, via various lenders such as banks, building societies, other types of online lenders. They are also sometimes available in shops, at high street money lenders or at pawnbrokers. When applying, the applicant must provide details of their identity and home address as they would with a standard credit card. Prepaid ones, however, differ in that they are not dependent on credit checks or an applicant’s earnings so they can even be obtained by those with a poor credit rating.
Prepaid Credit Card Charges
Despite the obvious benefits, pre pay credit cards do not come without their costs. As with more standard types of cards, there are usually a range of credit card charges to consider. One common fee is the payment of an application fee of up to £10 just to open the card; in addition cardholders may be subject to a 2% to 3% levy each time money is loaded onto it. A monthly fee may also apply for use of the card, and a person could be charged a small transaction sum for each time it is used. Given this, it is important that the card user considers carefully how they will use the card: making small payments over a long period can be quite inefficient, for example.
Prepaid Credit Cards with no Fees
Prepaid credit cards with no fees are uncommon, but not unheard of. The best prepaid credit cards are those which are easy to use, safe, convenient, but are also free to take out and use.
Compare Prepaid Credit Cards
Every applicant considering taking out a prepaid credit should therefore have a good look on the market and compare prepaid credit cards using dedicated websites to find the lowest priced products available.