Credit Card Rewards

If you are considering using a prepaid credit card, it is important to understand the difference between it and other bank cards. In this article I will discuss the key differences between these cards.

When people begin using ATM cards in the 1970s, there weren’t many places they could use them. While credit cards were able to be used virtually anywhere, ATM cards could only be used at the machines. However, as time passed, more features begin to be made available to people with ATM cards.

People begin to be able to check their balances and transfer money between accounts. The debit card was soon introduced, and by the end of the 1980s merchants begin to accept them for point of sale transactions. To make these transactions, customers had to enter their private PIN.

As debit cards begin to be used more like credit cards, credit card companies were beginning to discover that they were losing customers. Many people didn’t have the credit necessary to use their cards, and had switched over to ATM and debit cards. The large credit card companies begin to work with the banks in introducing a new type of card onto the market.

This card has come to be known as the prepaid credit card. It differs from a standard ATM card in that it can be used to withdraw money from ATMs as well as make purchases in stores and online. It differs from a standard credit card because it doesn’t come with a balance and funds must be loaded onto it by the customer.

A prepaid credit card differs from a prepaid debit card in the sense that users may be able to increase their credit rating when using it. They also don’t require a PIN to access funds with the exception of when you’re trying to withdraw money from an ATM.

Customers must pay for a prepaid credit card up front, while they are issued a traditional credit card free of charge. This is how the large credit card companies make their money. The money on prepaid credit cards aren’t borrowed like standard credit cards.

The money that the customers have on the card is the money that they have added. They are able to control their own credit limits, and can add money whever they run out. ATM cards are simply used to pull money out of a checking account, but cannot have money actually added to them.

Prepaid credit cards have been around for over ten years now, although they are just now coming into the spotlight. Prepaid credit cards are basically credit cards backed by major credit card companies that offer you the ability to deposit money onto the card and then use it for purchases. You are not allowed to spend anything more than you have deposited in most cases. It is a great way to teach students good financial responsibility. There are a lot of advantages to prepaid credit cards, and only a few disadvantages. However, before committing to any prepaid credit cards, you should be clear on the companys rules and fees.

No Credit Checks

One great thing about prepaid credit cards is that there is usually no credit check required. This makes prepaid credit cards ideal for those with lousy credit scores or even those without any previous credit to build their credit. If you have bad credit, this is a nice way to slowly rebuild your credit score. Creditors will see the card on your report and see if you use it responsibly and often.

No APR

Many prepaid credit cards offer no APR on money deposited and your purchases. Some do charge high interest rates on your balances however, so beware. There is no reason you should pay a monthly interest rate on money you have deposited or on purchases. Therefore, you should certainly look for cards that offer no APR.

Fees

Just like the bank, some prepaid credit cards charge fees on your transactions. Some prepaid credit cards will charge you ATM fees or cash withdrawal fees. These are the most common fees with prepaid credit cards. Some cards however may try to charge you a monthly usage fee. Try to get a prepaid credit card that does not charge this monthly fee. They exist out there, so just search. You will save yourself a lot in the long run by avoiding a monthly fee on your prepaid credit cards.

Direct Deposit

Prepaid credit cards often have the ability to allow you to directly deposit your check onto your card. This eliminates the need to go to the bank each week. This is the perfect option for the cardholder that uses their prepaid credit card for everything. Take advantage of these convenient options, as they can save you time. The truth is, prepaid credit cards are responsible ways to spend money. They give you the option of using your money anywhere credit cards are taken without leaving you with a high monthly bill.
Prepaid credit cards can also offer reward programs and other incentives similar to regular cards. They are convenient and low risk. As with any credit card, make sure your prepaid credit cards have terms which with you agree. It is better to read everything before rather than later.

The numbers vary on how many credit cards each person carries. I’ve seen it stated anywhere from five to fifteen counting bank cards, gas cards, and department store charge cards. But there are still those hold outs, people who don’t have any credit cards at all.

If you’re one of these lucky people and reading this on the internet, chances are you’ve seen something online that you wanted to buy, but the problem was you needed at least an online credit card to pay for it. That’s where the prepaid debit card can come in handy for those wanting to avoid credit card debt.

With a regular credit card, the issuer lends the money to the consumer who in turn pays for the charge at a later date. There are those who pay the entire bill due upon receipt of their monthly statement. However, many of us run a balance each month and pay an affordable portion of the bill and are charged an agreed upon interest for the outstanding balance. Believe me when I say, it’s easy for that balance to creep up before you finally realize it’s in the thousands of dollars of an unsecured debt you then owe.

For those of you who don’t want to take a chance on getting yourself in that situation, you avoid credit cards completely. But that can be a problem if you want to take advantage of so many outstanding offers available on the internet. Without an online credit card you may want to look into a prepaid debit card.

With a prepaid debit card you deposit the funds with the financial institution in advance. You receive a card that looks the same as any other credit card and you can use it just like a regular card wherever their logo is displayed. The difference is the amount charged is then taken from the credit balance you maintain with the issuer.

Many of you don’t like to carry that much cash around. I know with me, I can go thru cash like water. But if I have to charge it, even with a prepaid debit card, I think twice. Plus I can keep better track of where that money goes. Another advantage with a prepaid debit card is it’s accepted at all ATM machines so that you have continuous access to your funds just like cash.

So if you are one of those who has managed to escape this long without a credit card and would like to take advantage of the new freedom of shopping from comfort of your own home on the internet, you might take a moment of your time to shop online for a credit card or at the least, a prepaid debit card. With a prepaid debit card, rather than you paying interest, you receive interest on your credit balance.