Differentiating Prepaid : We all know about the humble credit card. It is a piece of plastic with purchasing power. You swipe it once and it feels empowering. Twice, and it can be habit forming. Thrice and it is guilt inducing. Then later on, you find yourself in despair since the bill is incredibly expensive. This is where the debate on prepaid debit and credit cards ensue. They serve as good alternatives for the regular credit cards. Both offer the feature of preventing anyone from overspending and at the end of the day; also help in improving your credit report.
The prepaid debit is unique since it allows you to use your card to access your loaded money to the card. Therefore, the money is directly pulled from the money you placed. Differentiating Prepaid This is ideal for someone who cannot set up a bank account yet or if they have some debt issues. The good thing about this account is that it is not directly connected to a bank which saves you from overdraft fees. The issue with this card, however is that they cannot help you in building your credit.
The prepaid credit cards are also known as secured cards. This is secured since you can only use the money that you have deposited on the account. There is significant difference from the debit card since the prepaid credit can be used to make monthly payments. This is also more advantageous such that it helps you in building your credit. If you do not have credit or was recently bankrupted can use this card in rebuilding their credit in a safe and secure manner.
A bad thing about these cards is that you can accrue very high fees. You might need to pay an annual fee and other fees. Therefore, you have to read the terms and conditions for the cards before agreeing on using the cards. Some companies might be just taking advantage of individuals who do not have any choice. Choose companies that put more focus on your needs more than their own benefits.
If you really want to get credit cards, some companies offer low limit cards and this is advantageous for those who want to build their credit. It is necessary to shop for options and choose only 1 or 2 cards. Too many cards will be overwhelming to the individual’s finances. Always be wary of your spending activities.