Credit cards are a great necessity in today’s world. They are needed and can be used at many places and for different purposes. From renting a car till buying a shirt, you can use your credit card. They are of many different types to serve to different categories of people. Some people can control their spending; they devise a budget and remain into it without much effort. But there are some people who, no matter how much they try, cannot restrict or limit their spending until they are put under some limitations. They are normally the people who are termed as impulse buyers. Who can purchase anything on an impulse even if it is useless for them.
For such people there is a credit instrument that keeps them under check. This credit instrument is called prepaid credit card. A prepaid credit card is like a debit card.
A financial institution issues a card just like a credit card. It is associated with an account that already contains an amount of money. You can spend only up to the amount of money in your account. You are given a credit card number that you use for the transaction. They are also called prepaid internet credit card because they can be used for making purchases online. They are prepaid because you deposit a certain amount in the account when a prepaid credit card is issued to you.
Prepaid credit cards are very beneficial for people who are unable to get conventional credit cards because they have bad credit rating or they do not have credit history at all. The reason behind this is that prepaid credit card does not involve any credit card. It works like a debit card, so your transaction history is not reported to any credit agency. People with bad credit history can easily get a prepaid credit card because the financial institutions have no risks involved in it. They are not lending any amount of money to anyone. So they do not fear default of payments. And because financial institutions are not lending any amount of money so they do not interest charges on a prepaid credit card. This relieves even the holder of the prepaid credit card. He does not have to worry about any charges accruing on the money. He is well aware of the amount of money that is their in his account and he knows that he cannot use more than that.
A prepaid credit card is beneficial in more ways than one. It does not involve any interest, because it is a debit card. No amount of money is lent to you, so there is no interest on it. As it is interest free so it is hassle free. You do not have to worry about interest accumulating on the outstanding amount.
Similarly, there are no monthly payments or installments. Therefore certainly there are no late payment charges. This is all because you deposited the amount at the time of the issuance of the prepaid credit card and it is the only amount you can use, not more than that. Apart from making online purchases online, it can also help you in paying bills online.
You do not have to worry about any debt. As no one has lent you any amount of money, you do not have to worry about returning any. Whatever is there in your account is yours.
Prepaid credit card is a great way of balancing your budget. You keep your spending under check. You cannot over spend the amount laying in your account. This keeps you on the right track.