About Prepaid Credit Cards
Prepaid credit cards really began to enter the mainstream during the 1990's when credit card companies began to realize that many in the United States were not able to successfully apply for their credit cards because of poor credit ratings.
The credit card companies were finding that many of the people who were able to get a regular credit card were actually missing monthly repayments, or just paying their minimum monthly repayments and never paying back any of their accrued credit card debt. This situation was damaging the business of the credit card companies as they were holding the debt of many of their customers, who would then declare themselves bankrupt and unable to repay their credit card debt.
In an attempt to remedy the situation, the secured credit card was introduced. This meant that if a person was deemed to risky because of their poor credit rating they would have to secure their credit card with a safety deposit, held by the issuing company. This proved a good solution to the problem because if the secured cardholder missed a payment the secured credit card issuer was able to use the safety deposit to pay the balance. Secured credit cards proved a success for credit card issuers and customers alike - banks gained new customers who would not have been eligible for a regular credit card and people with a bad credit score would finally be able to use a credit card.
The prepaid credit card is basically another version of the secured credit card. The main difference between secured credit cards and prepaid credit cards is that there is no safety deposit necessary with a prepaid credit card application. As well as this, prepaid credit cards are limited to the amount of money that has been 'prepaid' onto the credit card. Therefore, the cardholder could only ever spend an amount less than what was 'prepaid' onto the card and never have to worry about missing a repayment.
Prepaid credit cards offer many benefits:
- More secure than carrying cash.
- Can be used worldwide.
- No need for a credit history or positive credit rating.
- Can be easily 'prepaid' over the phone.
- Also can be 'prepaid' at ATMs.
However, there are also disadvantages with the use of prepaid credit cards:
- Strict notification requirements if the card is lost or stolen.
- No use of the bank's credit facility.
If you do not have a good credit score or perhaps do not have enough money to set aside as a safety deposit for a secured credit card then applying for a prepaid credit card is the solution for you.
Apply For Prepaid Credit Cards
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