Prepaid credit card? Can anyone point out the advantages?

Question

I am curious as to the advantages of a pre-paid credit card. Surely if I had money to put on a prepaid credit card then I wouldnt need the card? Also if I had the money to put on a card surely I would just draw the money out of the bank or pay with my bank card?

My friend was going to go for one and I couldnt think of any advantages to it.

I agree geegee - all I can see is that my money sits in their bank account and not mine - and I can just as easily pay with my debit card.

Thanks all - I still don't see the advantages - I understand about rebuilding the credit file and I suppose if someone had gotten into that situation then its a good thing - still I would still prefer my money sat in my bank account rather than that of a big company.

Just had a look at some of these pre-paid credit cards. Isn't it amazing how, for something that is supposed to help those with financial problems, they not only charge you to take one out (Cheapest I found was £9), they also charge (minimum I found 85p a go) you each time you use it? Big companies making money from the little people all over again. I will pass it all on - thanks everyone but I think I would tell her not to bother if it was me.

Answer 1

Well they are really only good to build your credit rating as they report to the credit bureau's. Also they MAY match your contribution so if you put in 500 they put in 500 and you have a 1,000 limit that gets reported to the credit bureau's there by raising your credit score. I would just apply for a orchard bank card they approve almost everyone you can get one here

http://www.dgftaworld.net

Answer 2

Are you talking about a secured card?

There is no benefit to having a secured card if you have established credit already. The rates suck, you pay an annual fee and you are borrowing your own money.

However, if you have no credit, or bad credit a secured card is a life saver. This program will enable you to start off your credit history! You can't have a credit history if you can't prove that you pay bills on time. After a few months of responsibly paying your bills someone with no or poor credit could start to get department store cards and then after a year they could get real cards.

You can't let your money just sit there if you have secured card. You have to use it at least once a month. And then pay it. To build a history, you need to pay bills on time. Since the rates are high, I would just buy one thing a month and pay it promptly so you never pay interest on it.

I had no credit and some collections. Getting a secured enabled me to fix my credit. I put up $300, paid my bills for a year on time and now have better deals.

You can not build a credit history with a Debit card. Using a debit card is just like writing a check. You need a credit card or a loan to build a reliable history.

Read up on them at www.bankrate.com

Answer 3

The idea is that you cannot spend money that you do not have. You allocate how much you want on the card and when you've spent up - you've spent up. Personally unless the credit card is going to offer me a money back system like a normal credit card I don't see why I should give them money to sit in their bank when it may as well sit in mine earning interest and then I pay with a debit card. I'm sure it will help some people to budget.

Answer 4

I recent left a retail analyst position and right now the prepaid debit industry is booming. There are some major new contendors in the market such as Green Dot. You can buy a debit card and load it with money where-ever. One of the main draws to it has to do with immigration and transferring funds. But there is also some illegal activity that goes along with it such as transferring money for drugs, arms etc. It's similar to prepaid cell phone. If you don't qualify for a checking account for whatever reason a prepaid debit account is essential. It's wild to think about not having that debit card, I's flip without mine right.

Answer 5

The fee structure can be more attractive then a debit (bank) card, and credit cards are more widely accepted, especially internationally. It allows you to have access to the convenience of a credit card without actually taking on short term debt, or risking spending more then you have. For people with no credit history, it allows them to start creating one and building a relationship with the credit card company.

Answer 6

The benefit is that you have a credit card for those times when you need a credit card because cash or check won't work. Also, if you have bad credit, a pre-paid credit card helps rebuild your credit until you can get a normal credit card.

Answer 7

If you want to pay for something expensive, it is safer to carry a card around than the cash. If your wallet gets nicked they need your pin number to get your money, rather than just gettting away with all your hard earned cash.
You can use it in different countries, where you may not be able to access your cash, if you are stuck without money abroad someone can put money on it for you via the net, and it will be "topped up" instantly

Answer 8

A prepaid credit card dont do **** for you credit. Its useless and you lose money with those small fees that add up. You may have to pay .50 for each transaction. Its crazy tell your friend dont do it unless they just want to stunt with a credit card.

Answer 9

Rebuild credit for people with really really bad credit.

That's it. However normally people with bad credit can still get a card that has an annual fee.

Answer 10

Not sure read some credit tips and credit card articles on this site