Using your plastic card to pay for goods and services is something that you may be doing more of. Replacing the need to withdraw the money and to carry this around with you in your wallet. You probably find the whole payment experience a lot easier and quicker, as well as safer.
What can be an issue is just how easy it is to spend on your card. The convenience can lead to overspending and, if not managed properly, spiralling debt. For those that like to pay on a card but also like to maintain control of their spending – prepaid credit cards could be the solution for you.
Whether you have poor credit or low income, prepaid credit cards are available to everyone.
How Do They Work?
They look and feel the same as a normal credit or debit card. They have the long card number, chip and magnetic strip, and you pay for goods and services in the same way. The main difference between a prepaid credit card and a regular debit or credit card is that it is not linked to your current account. A prepaid credit card also will not allow you to pay for goods using a pre-agreed credit facility. This means, once the money that is available on the card runs out, you have no money left to spend.
Money is ‘loaded’ onto a prepaid credit card rather than borrowed. This is great if you want to manage your money in a better way. It is then up to you how much you decide to load on your prepaid credit card every month or week.
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There are some great advantages if you decide to use a prepaid card.
No Credit Checks
As the prepaid credit cards and debit cards do not offer a credit facility, you do not go through any credit check process.
Again, as they are no credit facility on the prepaid card you cannot get into debt.
Stay in Control
The prepaid credit card is very flexible and allows you to stay in control of your spending by setting a spending limit. All you need to do is top up the card.
Prepaid credit cards work in the same way as normal credit or debit cards do, especially if you want to use your card abroad.
Prepaid cards are a great way for everybody to learn about managing money in a responsible way. Whether you have had debt problems before or if you are starting out in life as a student, prepaid cards can give you independence.
Act as a Bank
Prepaid cards can act as a bank account. Some card providers have the facility to let you pay your wages directly into them.
Improve Your Credit Rating
Depending on the type of prepaid card that you have, you can potentially improve your credit rating.