Fundamentally, a prepaid credit card is synonymous to that of a debit card. For both these cards, owner of card loads the finances prior to making any buying. He/she deposits the cash in the account from where the money could be pulled out by the prepaid card. There are certain pros and cons of making use of a prepaid card:
Prepaid Cards Benefits
The foremost benefit of using prepaid credit card is that the candidate who applies for card does not have to go through a credit evaluation. Everybody who owns an account can be befitted with the prepaid credit card. There are no monthly or yearly charges and it is without any rate of interest. Besides that, individuals will also not receive any credit card bill.
When you make buying of merchandise on internet and personally at various retail shops, the use of prepaid credit card is very convenient and practical. Though the prepaid card is akin to a conventional credit card in many aspects, but there is a major divergence; the owner of card is not able to spend more than loaded amount in card. Hence, it keeps one within his budget constraints.
Cons of Using Prepaid Credit Cards
These cannot really do anything in perking up the credit position of the owner of card. In view of the fact that use of prepaid credit card details are not advised to credit referencing agencies, hence those people who aspire to revamp their credit followed by liquidation must look for other options.
A further shortcoming of these cards is that owner of the card can only make use of the amount loaded in card. Though it has been reported as an advantage; but at the same time it is also a disadvantage. If you have come across an unforeseen exigency; owing to which you have to spend more than the sum available in your account, then you may not be able to use it beyond your limit (loaded by you in card). Hence, you better look for alternate option to meet the expenses for such an exigency.
Unanticipated Charges for Prepaid Credit Card
There are different types of prepaid cards available in the market. One therefore, searches for the best one. Few of the credit card issuers ask to pay a fee, if someone does not have a bank account. Besides that, few of the banks also demand some charges for prepaid credit cards, if these have not been loaded with funds through direct deposit.
Like majority of other transactions on ATM machine, for using prepaid card; you have to make payment of ATM charges. However, many of the card owners don’t have knowledge that large number of banks asks for monthly charges, if your account has not been used for a longer duration. It may vary for the card issuers; the owners of cards sometimes have to pay fees for talking to a bank teller. Some of the issuers ask to make payment even for customer service calls.
For instance, a prepaid card costs you a US$ 1 fee for each of you online shopping. Its ceiling is US$10 in a month. It is also mandatory to pay a fee o US$1 for every retail purchasing; its ceiling is also US$ 10 in a month. It is therefore, of vital nature to go through the terms and conditions thoroughly prior to making an application for prepaid credit card.
