5 Reasons to Use a Prepaid Credit Card

For many people, having a credit card is a necessity to live and operate in our world. Unfortunately, these cards come with many disadvantages, such as high interest rates and security concerns. Luckily, through the use of prepaid credit cards, many of these disadvantages can be avoided.

Prepaid Credit Cards Build Credit

The first reason why a person should use prepaid credit cards is to build credit. Like all forms of credit, successfully making payments each month will help you will build and improve your credit history over time. With prepaid credit cards, since your balance will have been funded previously, you payment will always be on time and you can build credit immediately.

Prepaid Credit Cards May Avoid High Interest Situations

The second reason why a person should use a prepaid credit card is to avoid paying high interest charges. Normal credit cards come with very high interest rates, which can be over 25%. With a pre-paid credit card, you will avoid having to pay these excessive interest rates.

Prepaid Credit Cards May Avoid Building Additional Debt

The third reason why a person should use a prepaid credit card is to avoid building credit card debt. Credit card debt is financially devastating for millions of people. By using cards that are paid in advance, you could avoid accumulating an insurmountable amount of debt.

Prepaid Credit Card Rewards Programs

The fourth reason why a person should use a prepaid credit card is to earn rewards. Almost all credit cards come with the ability to earn rewards such as cash back or airline miles. Some prepaid cards also come with this benefit.

Prepaid Credit Card Security Features

The fifth reason why a person should use a prepaid credit card is to enhance security. When using a typical credit card for online purchases, information about your accounts can be obtained by illegal hackers. Prepaid cards do not contain as much personal information, so using them can be far more secure than using traditional cards.

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4 Responses to 5 Reasons to Use a Prepaid Credit Card

  1. Evan,

    For us, these seem like more trouble than they are worth (because we just use check cards/debit cards), but I do like the fact that the prepaid cards avoid additional debt and can be used in transactions where you don’t want to use your actual credit card.

  2. Great post! Cash is dead! I have used prepaid cards and the re-loadable ones are the best. It’s pretty convenient to just have more money added to the card.

  3. Your prepaid card does not build credit, because you have made the payment in advance, so there are no on time payments to be reported. You need a secured credit card where you guarantee your credit line by making a deposit into a specified bank account, but you cannot use that balance to pay of the monthly statement.

  4. Biggest reason for using pre-paid credit cards is the avoidance of debt. If you need a credit card for a trip/rental car/hotel room the pre-loadable cards work great. Another use of the pre-loadable cards is budgeting. If more families and individuals would think long-term their financial lives would be in better shape. The pre-paid credit cards are a good way to make this happen.

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