A prepaid credit card is a payment card that you preload with your own money. You can then use the payment card in the same way as you would a regular credit card. The prepaid credit card is a relatively new addition to the marketplace, and offers a great alternative for individuals who find it difficult to obtain credit, as well as those people who do not wish to have a regular credit card for whatever reason.
As well as giving you the peace of mind of having some ‘credit’ available to you, a prepaid card also offers a number of other benefits. First and foremost, of course, is that you are not getting into debt when you use it as you can only spend up to the amount of money available on the card. You will not be required to undergo a credit check to obtain one, therefore a credit ‘footprint’ will not be generated and there is no risk of further harming your credit score by having a failed application for credit on your file. You are guaranteed to be accepted even if you have County Court Judgements.
A prepaid credit card is generally MasterCard or Maestro, both of which are widely accepted around the world, meaning that you can use it at home and abroad, as well as on the Internet. Most of the UK prepaid card providers now offer embossed, CHIP and PIN cards, which look much the same as a regular credit card. Many providers will also allow you to manage your account online or over the phone.
Some providers charge a monthly fee for use of a prepaid card and others a one-off annual premium. However, if you intend to use the card for a long time, then buying one outright could reduce or even eliminate these fees altogether.
Prepaid credit cards are becoming more popular as people become more cautious with their spending habits. There really are no drawbacks to owning one, and certainly no stigma associated with them these days. You have ‘credit’ available to you, but you are in control of your money and not spending what you can afford to pay back. You will not incur any interest charges, late payment fees or go over your credit limit. You can even have one if you are under 18, making them the perfect choice for young people who are unable to obtain a regular credit card. Overall, they are a good choice all round for consumers.