Archive for October, 2009

The Rise of Prepaid Credit Cards

American consumers look for ways to lesson the pain of a credit crunch and deep debt, especially during economic downturns. Many consumers may find that credit cards have moved beyond their reach. Prepaid cards may be the solution to much needed relief. Typically marketed to students and those with poor credit, prepaid cards offer the advantages of standard credit cards without the fear of accumulating more debt.

Unlike debit cards, which require a checking account, both prepaid and secured cards are not tied to your bank account. There are no monthly payments because the card, similar to a gift card, has money deposited into an account specifically for this purpose. The spending limit is equal to the amount on deposit. Network-branded cards bearing the American Express, Visa or MasterCard logo can be used anywhere that traditional credit cards are accepted.

If you’re interested in a prepaid or secured card, there are a few things to consider:

Research comparisons of top credit card deals and apply online. Fill out applications for Visa, MasterCard, American Express, and Discover. Choose the right card for your specific financial needs.

Free Prepaid Credit Card Benefits

In today’s credit-driven society, it’s common for people to have problems managing that credit. Often, this results in a future inability to obtain credit; or at the very least, difficulty in obtaining credit, and high interest rates when a line of credit is available. Since some transactions, like making hotel or rental car reservations, require the use of a major credit card, a person who doesn’t have one, and isn’t able to obtain one, might find him or herself in a problematic situation. Fortunately, there is an answer for this problem. A person in such a situation can use a free prepaid credit card.

These prepaid cards are actually a bit more like debit cards than credit cards, except that they are not tied to a person’s individual checking or savings account. A user opens a specific account for the card, and deposits the amount of money that he or she chooses into the account. A card is then issued for the amount of money that is available in the account. Some prepaid credit cards charge fees, but some charge very little or no fees. The latter is known as a free prepaid credit card.

Why would a person use one of these cards? As previously mentioned, some types of reservations require a major credit card. For a person with a poor credit history, the prepaid card may be the only option to obtain such. Since a person can only charge up to the amount that’s already deposited in the account, no credit checks are required in order to obtain them. Prepaid cards are also great options for money management. They are guaranteed to prevent overspending, and users won’t be surprised with a large monthly bill or high interest rates. These are all great reasons to use a free prepaid credit card.

One important point to remember is that the cards aren’t actually credit cards. Users will not be able to spend more than the amount that is in their account, and the purchase will be declined if they attempt to do so. They don’t offer overdraft protection, so in the event a person needs to spend more than the amount remaining in the account, a “split-pay” transaction will be required. Another feature that prepaid cards don’t offer is a bonus or reward program such as flier miles or gift cards. However, since a person with a free prepaid credit card also won’t find him or herself with a large debt or high interest rates, the positive features certainly outweigh the negative ones.

Article by Louis, CardKudos.com

Prepaid credit cards explained

If you’ve ever used a store gift card, then you’ll understand how a prepaid credit card works. The concept is very simple: a prepaid credit card is pre-loaded with your own money, so you are only able to spend up to a pre-determined, set limit. These cards can usually be used virtually anywhere that a standard credit card is accepted.

Prepaid credits work in exactly the same way that a regular credit card works. To pay for your item or service, you swipe your card and then either enter your PIN (which is supplied with the card) or sign the receipt. The total amount of the transaction is then withdrawn from your card immediately.

The main difference between a prepaid credit card and a normal credit card account is that with prepaid card, you are dipping into your own money, rather than using funds borrowed from your lender. Therefore, you can only use the card until your pre-loaded cash runs out, or until you top up the account. Funds can be loaded onto your prepaid card by cash at your bank or at the Post Office, via bank transfer, or via payment from another credit card.

A prepaid card looks like a regular credit card, and can be used to buy all sorts of everyday expenses, including petrol, groceries and bills. Prepaid credit cards are particularly useful, however, when you’re shopping online or overseas.

Some online retailers and service providers, such as certain airlines and hotel websites, only accept payment via credit card, and a prepaid account allows you to shop on their websites without needing an active credit card account.

The other benefit of a prepaid credit card is the flexibility it provides for certain people and situations. For example, if you’re new to a country and you haven’t yet built up a credit rating – or you have a history of bad debt, and you’re starting your credit record from scratch – a prepaid credit card could help you build your credit file.

Also, if you’re going on holidays, a prepaid credit card offers you the opportunity to load a certain amount onto your card, so you can avoid paying foreign currency exchange fees – and so you can stick to your pre-planned budget!

With prepaid credit cards you will not be subjected to any credit checks, so you can usually get signed up for a card instantly. Just watch out for the fees: some providers charge a card application fee on top of monthly service charges, cash load/deposit fees and withdrawal/purchase fees, so it pays to shop around for the best credit card deal.

Posts about Low Interest Credit Card News as of October 29, 2009

Benefits of Prepaid Credit Cards

Prepaid credit cards appeared in Australia about three years ago. Ever since they are gaining popularity among users or all ages. The fact that users require no credit history and absence of monthly repayments makes it a very attractive way to organise your plastic money.

Different Types of Prepaid Credit Cards

There are two different types of prepaid cards: charge cards and gift cards. A charge card is normally linked to your other savings or cheque account. It gives you a Visa or MasterCard access to your own funds. So, each time you make a purchase with this card, the funds are drawn from your own account. There is no credit from the bank and there is no balance to repay.

But once you run out of your own money, that’s it. You’ll need to deposit (or “prepay”) more funds before you can use this card again. The second type is a Gift Card. It’s like a normal gift card that you can get from a retailer, but with Visa or MasterCard functionality attached to it. So, if you have a $100 Prepaid Credit Card, you can spend this money at any retailer accepting credit cards. Once you run out of credit, there is usually no way to “recharge” it.

Benefits of Prepaid Credit Cards

1: Convenience

Cardholders can use prepaid cards to pay for shopping, petrol and utility and household bills, basically anything and anywhere credit cards are accepted. It can also be used for making payments on the phone or online and, in some cases, withdrawing cash at ATMs.

2: Safety

Cardholders can make purchases and withdraw cash when they need it. Access to funds is the same as with any other credit card. Use your pin or sign the receipt.

3: Protection

A prepaid card can be replaced if lost or stolen and carries the same liability protections against unauthorized purchases as other credit cards.

4: Financial management

Itemized card statements and online reporting that is available to charge cards, make tracking expenses and monitoring spending activity easy. Manage your spending by loading a limited amount of money on the card. You can only spend what is available on the card.

Prepaid Credit Cards in Australia

Back in 2006, Visa’s executive vice-president for Australia and New Zealand, Bruce Mansfield, said that he expects a strong take-up of prepaid cards in general. “Australians are pretty savvy money managers and a prepaid card is a perfect money management tool,” he says. “Australians have lapped up prepaid and disposable mobile phone cards and I expect similar long-term results in Visa prepaid.” (Money Magazine’s June 2006 issue).

Ever since, the popularity is growing with major banks offering prepaid card in store or on the internet. There are many bank and non-bank organisations offering prepaid credit cards.

What’s Next?

To find out more about this product, it’s always best to approach your bank. It makes sense to have your accounts with the same bank, for easy reporting. There is also an ever increasing number of shopping outlets and smaller banks that offer this new product. Whichever way you choose, don’t forget to check with your accountant, lawyer or financial planner. Having an easy way to spend money does not mean that you’ll have more money. It’s wise to be careful and do a proper budget before adopting any new spending activities.