Credit Card Articles
Prepaid Cards: What Are They?
A few important things about prepaid cards..
The "right kinds of" prepaid cards work much the same way as normal credit cards work, with the difference that they are not credit cards, the main difference being that you don't get any credit.
While with credit cards you don't need to have any money of your own to use them, with "the right kind" of prepaid cards you need to first "prepay" some money into the card.
I use the term "the right kind" of prepaid in a loose way as there are a few types but by that I mean that there are some cards that are marketed as prepaid cards when in fact they are simply a way for chains of shops to get you to spend money with them, for instance store cards or gift cards usually are marketed under the caption of "prepaid cards" and if they are not, then people still might refer to them as such..
Don't get me wrong when I say "get you to spend money with them" I am not implying that I think it is a negative practice or that I condemn the practice.. just that that is what the main point of certain cards, that is it.
Obviously there are positive points to gift/store/gas cards, buying them might help you save money, they might be given to relatives and friends as gifts and a lot more benefits.. but they are not cards that get very close to the spirit of credit cards themselves.
The right kind of predpaid card will be JUST THE SAME as a credit card and will offer much of the same benefits, for instance it will be Visa/Mastercard enabled and so you will be able to use it wherever they take Visa/Mastercard and that's about everywhere in the civilized world.
You will be able to use such a prepaid card with your paypal account, which means that you will get all the benefits of the paypal account itself and that's total security when buying online: this is no simple bonus.
You will be able to withdraw funds in cash from the ATM circuit, it means that you can travel to a foreign country and when in need of cash you can just withdraw it from a cashpoint! How cool is that?
One thing that the right prepaid card will have over your ordinary credit card is that it is simpler to pay money into it. If someone, somewhere wants to pay you money into it they can easily do it, whereas it wouldn't be exactly that easy to pay money into a classic credit card, for instance your employer could pay money into it, or you could get a loan paid into it or ever get your security check paid into it, you can use it to pay regular bills like electricity, gas, phone.
Of course there is no "approval" hassle to go through as it is your own money you are using it with so you are no risk to the prepaid card company, and last thing, a good prepaid card should get your credit score up!
Also read Which Prepaid To Get