There are many benefits to using a prepaid credit card. A prepaid credit, also known as a secured credit card is defined by bank rate as a credit card that, “…requires a cash collateral deposit that becomes the credit line for that account.”
What are Some Advantages of Using a Prepaid Credit Card?
You can Control your Spending
By choosing your limit to load the card you can create controls in how much is spent. Since you are only spending money you add to your prepaid card account, you can avoid falling into debt and possibly damaging your credit score. Because you’re not borrowing money, you will never have to worry about finance charges, late charges, or over-the-limit fees.
Additionally, most prepaid credit card sites allow for you to easily track your spending.
Both features could be particularly useful for children and teens. A prepaid credit card could be used to give them the freedom to purchase online or at any store that takes a major credit card, but gives them a build in limit and lets the parent see what was purchased.
The Ability Purchase Online
Unlike cash, since a prepaid credit card has a major credit company backing it, you can use it online.
With increasing crime rates in certain parts of a the country you have to ask yourself whether it is really smart to carry around a wad of cash? A prepaid credit card provides you with the option to cancel it if you were ever robbed, mugged, or if you simply lost your wallet. Similar to other mastercard or visa products prepaid credit cards provide that particular company’s liability protection if unauthorized charges are made.
Everyone is Accepted and it Helps Build Credit
Since the amount being used is secured, there are no rejections when it comes to secured or prepaid credit cards! They also provide a credit payment history to the major credit reporting agencies.
This post was written by Money 411. Money 411 is sponsored by AccountNow and is tailored to provide useful advice to the millions of Americans who are either unbanked or underbanked.