by Bo, January 05, 2012
Pre Paid credit cards are cards that you can purchase at various retailers. They are similar to a gift card in that there is a spending limit, but they can work for you more like a credit card. Once you buy the card, you then are able to load it will funds. You can then use it in credit purchasing circumstances. There are some pros and cons to pre paid credit cards that you should be aware of before using these.
Lets Start with some Pros! For many people over spending is a problem. If there is room on a card, they will use it. Especially in tough economic times, some people even have to rely on credit cards to get food on the table. Breaking the cycle of spending can be hard. A pre paid credit card can help to your benefit.
By loading a pre paid card with what you are able to spend will help with staying within your budget. When you only have a set amount, you are likely to be careful about your purchases and trim out what you can. The good thing is that if you need more money, simply load on more for your bank account.
You can use pre paid credit cards at ATM’s and there is no credit checks. If you use checks a lot and are terrible at managing your check book, using a card like this can save you tons of money on over draft fees. The Pre Paid cards can be a good alternative to a regular debit or credit card when traveling too. Loading your card with the amount of money that can be spent on extras like souvenirs can help curb over spending.
These type of cards are perfect for a college student or teen that is learning to budget and save money too. It is easy for the student to have the card and it be reloaded from home by the parent for the set amount available. It is so much safer on the parents end to have control by not issuing a real credit card to the child. No surprises when you open the bill since there is no bill!
Some Cons of pre paid credit cards is that you will get no credit benefits from using a card such as this. It is not a credit card but it can be used like one. When it is empty you need to use a computer to reload it or call a phone number.
There are fees that can occur with using a pre paid card. Some charge activation fees and monthly fees. Many stop the monthly fee when you reach a certain number of transactions or dollar amount spend.
If you are looking into using a pre paid card make sure to read the fine print all all of the rules and regulations. They can be a great tool, if used properly.