Prepaid Cards Vs Credit Cards
Author: weissheiss
If you have previously shied away from using plastic, have you ever considered getting a prepaid card? Typically widely accepted, these cards may offer the convenience that is associated with a payment card, without the drawbacks that may be linked to an interest bearing credit card arrangement.
You simply load them up with cash and use the card until the money runs out. There is typically no temptation to overspend or any risk of running up debt!
What do prepaid cards cost?
The cost of using prepaid cards may vary between providers. Some card providers may charge for:
topping up the card by electronic transfer from your bank; putting credit on the card at a PayPoint terminal; issuing the card in the first place; providing a replacement should you lose the first card; withdrawing money at an ATM; spending money at the point of sale; and withdrawing money abroad. However, the difference between the way in which prepaid and credit cards are priced is that prepaid ones are all deducted either before the card is used, or very shortly afterwards. With credit cards, on the other hand, you may find that the true cost of borrowing does not become apparent until you receive your credit card statement the following month.
Who can get a these cards?
With credit cards, the card provider may have to ask questions about how much you earn, and what your current commitments on other payments may be. They may also have to run a credit search to determine what information other lenders with whom you have had dealings have recorded against you.
The reason for this caution is that money is effectively being “lent” to you on a credit card.
With prepaid cards on the other hand, no such money is being lent. In fact, because you have to load up the card with your own funds before it can be used, the only money that you can spend is your own.
Accordingly, you may find that no credit check may be needed for prepaid cards. This means that even people with a less than perfect credit history may be eligible to sign up for a card.
The application form to get one may be easier (and quicker) to fill in, although some information about you may be needed to prevent fraud. But assuming that you do not have to wait for the results of a credit check, you may be able to apply for a prepaid card in a couple of minutes. A credit card on the other hand may take longer to come through because a credit check may need to be carried out and you are not guaranteed acceptance.
Posted in Prepaid Credit Cards | 
Tags: Bearing, Card Provider, Card Providers, Convenience, Cost Of Borrowing, Credit Search, Lenders, Lent