In many ways, a prepaid credit card can be thought of as “plastic cash” in the notion that the user will be presented with a limited amount of funds that can be used to purchase goods or services. Still, it should be noted that there is a primary difference between a prepaid card and a standard credit card. While a credit card will allow one to purchase on a line of credit, a prepaid card has a certain limit that cannot be exceeded. Once this limit is reached, the card will need to be “recharged” for a fee. Then, the money can be accessed again. In this manner, a prepaid credit card can be compared to a long distance calling card; each needs to be “topped up” from time to time.
Types of Prepaid Credit Cards
A prepaid credit card can be broken down into several categories. The most obvious will be the amount of money that is able to be accessed. Cards with a value as low as twenty pounds are available while others will offer substantially more liquidity. Secondly, cards designed specifically for teenagers are available; a powerful means to build credit early in life. Some cards will require an account that needs to be opened before approval. Thereafter, funds can be deposited by the owner. Account-free cards require no signup, but the money will need to be transferred to the company in question so that they can recharge the balance.
Things to Take Into Consideration
The most important aspect to take into account is if there are exorbitant fees associated with the card (checking a balance, card replacement or overdraft charges as a few examples). When does the card expire? Can the exiting balance be transferred if the card is lost or stolen? Are there any cancellation fees? Perhaps most importantly, recall that some cards will not be able to be used for certain purchases. So, it is critical to determine the types of establishments that accept the card. During instances such as travelling abroad, the issuer should be contacted to answer all of these questions.
How to Get the Best Deal
Much like when applying for a normal credit card, it is wise to shop around to find the best deal. Obviously, the Internet will provide a host of third-party comparison sites. Some other variables to keep in mind are:
- How reputable is the company in question?
- Was the card issued by a federally recognised institution?
- Can the card be customised?
- What are the limits of the card and can they be increased?
These are a handful of factors that will enable any consumer to encounter the most relevant card.