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Prepaid Credit Cards

If you have a history of bad credit and are unable to obtain a mainstream credit card, then prepaid credit cards may be just the answer you are looking for.

First of all, although prepaid credit cards are accepted at any retail outlet where the credit card logo is displayed, strictly speaking they are not a 'credit' card, as the issuer provides no credit facility to you. Rather, your spending limit is determined by how much money you have on the credit card at any given time.

Once the amount on the card has been spent, the cardholder can either buy a new prepaid credit card or elect to transfer money on to the existing card, depending on the card program.

Although prepaid credit cards sound very like debit credit cards, the two should not be confused. In the case of debit cards, any purchase for goods or services you make will automatically be charged to you bank account - for which the debit credit card has been issued. However, purchases for goods or services made on prepaid cards goes off the balance already on the card.

Because of the prepaid nature of these cards, they have several benefits, such as:

-no interest is charged

-they give people with a bad credit


history the option to use a credit card

- the 'credit' line is variable depending on the amount on the balance of the card

That said, you still need to review the terms and conditions of the application form carefully as prepaid credit cards can have

- a monthly membership fee

- an application fee

- a purchase fee

- a monthly transaction limit fee, i.e. if you spend over a fixed amount each month you are charged a fee for any additional transactions

- a fee if you use the card to make ATM withdrawals

Nonetheless, the card is a superb option if you either cannot obtain a regular credit card or are tired of all the fees and interest charges that are normally associated with standard credit card.



About the author:

Joseph Kenny is the webmaster of the UK credit card comparison site http://www.creditcards121.co m/, where you can find a selection of credit card advice. For US visitors there is also the comparison site http://www.credit-cards-i nfo.com/ for all US interest free offers.