The use of plastic money or credit cards has increased dramatically over the years. Compared to cash or check, credit cards are considered to be safer and more convenient way of payment. However, not everyone can qualify for a regular credit card so easily.
Many issuers require good or excellent credit history before granting approval. For people who have no credit or bad credit history, does this mean that cash and check are the only options?
Prepaid Credit or Debit Cards for Everyone
A prepaid debit card is the perfect option for people who do not want to go through a complicated approval process. Whether you have no credit or bad credit history, you can get a prepaid debit card with no hassle. All you have to do is open a debit account, make a deposit and you're approved.
Prepaid cards can be used much like a regular credit card for buying groceries, shopping at malls, paying your utility bills, or purchasing from online stores. You can use it for payment as long as you have available funds in your account.
Prepaid Debit Card Limits
How is a prepaid card different from a credit card? It is important to understand that debit cardholders are not given a credit line. Each time you use your debit card, your charges are instantly paid off using the funds deposited in your debit account.
Thus, if you have made a $200 deposit, you can only use it to pay for charges up to $200, no more than that amount. Once you have used up your available funds, you need to make a new deposit in your account to be able to use you debit card again on new purchases.
Prepaid Debit Card Advantages
Prepaid debit cards are widely accepted anywhere in the world. Merchants who accept credit card payment usually accept debit card payment as well. Actually, people who often travel are finding prepaid cards as a great option. Instead of bringing a large amount of cash, travelers can simply take their debit card to cover for their expenses.
Prepaid credit cards are actually perfect for teenagers since the risk of having bad credit is zero. Parents can easily send allowance by simply reloading their child's prepaid account. Even employers use prepaid cards to send payment to their home based employees or freelancers.
If you want to make a purchase from the internet but are wary about fraud or ID theft, you can choose to pay with a prepaid debit card. It is a safer way to shop online as it allows you to send payment without revealing your credit card number or bank account details.
The absence of a credit line can actually be an advantage for prepaid debit cardholders. For one, it gives you more control over your spending. Not being allowed to go over your limit is actually an advantage because you can avoid overspending and unnecessary purchases. Add to that, you won't have to worry about extra fees such as interest rate, overdraft fees, late penalty fees, and other credit card surcharges.
Copyright (c) 2010 Tara Tiemann
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