Charlie and the Credit Factory - Prepaid Credit Card

Prepaid Credit Card

Here's some prepaid debit card info. Read it.

You have a teenager going off to college. Or you just got out of debt. Or you've had credit problems in the past. Or you're going on vacation and don't want to take cash. All of these are good reasons to get a prepaid credit card.

What is a Prepaid Credit Card Anyway?

A prepaid credit card is very, very similar to a regular credit card. The difference is that you pay the money before you spend it. That way, you aren't given high credit limits and all the temptations that go along with that--like overspending! In fact, when people use regular credit cards to buy things, they tend to spend 30% more. Did you know that?

If you just got out of debt or have less-than-stellar credit, a prepaid credit card can be a great way to teach yourself how to use credit wisely and not to overspend. This also works if your getting ready to send one of your kids to college. You can give them a prepaid credit card to use in emergencies. Another good thing about a prepaid credit card is that you can use it when you go overseas in place of cash or traveler's checks. Sure, it's good to have a certain amount of cash and/or traveler's checks, but if a prepaid credit card is stolen, the damage will be minimal compared to what it could be.

One of the best things about a prepaid credit card is that there are no interest charges and no APR. There usually is a small fee when you first set up the card (generally $5-$50) and each time you "reload" the card with money, there's a small fee (around $5). Still, that's cheaper than the annual fees and APRs charged by most credit card companies.

A prepaid credit card is fairly easy to get (there's not even a credit check) but you need to have the cash upfront. This is very similar to the way a gift card works, except you don't pay a fee for a gift card. And in some cases, you can't use a prepaid card for monthly bills. But overall, a prepaid credit card is an excellent choice for the careful consumer.