In the strictest sense of the word, prepaid credit cards are not really a ‘true’ credit cards because the person does not receive credit. They are simply able to access some of the financial features that are associated with the standard credit card.
In the event they can be used to purchase goods and services. They also remove the burden of debt from the users and they can be very good for people that are having some credit rating problems in the first place. If one is intending to keep a lid on their personal finances then the prepaid credit cards can provide a ready made solution to their problems.
The user is able to utilize the funds that have been stored on the card through an agreed deposit system. It might carry the credit card brand with the different providers such as VISA, American Express and Discover. These sorts of cards differ from the debit cards because they do not require a PIN number to work.
Once the card has been purchased, the user can then load it with the money that they expect to use. However there are limits that are set which have to be followed or else the card might be withdrawn. The other advantage with the prepaid credit cards is that they can be given to minors over the age of thirteen given the fact that they do not involve a line of credit.
There is no interest on the prepaid cards but there could be a monthly fee or a loading fee depending on the company that is being used. One of the main advantage of Prepaid Credit Cards is that there are hidden fees that will need to be paid in order to keep the account going. You have to include these fees when making calculations about the possibility of owning some prepaid credit cards. Some people also find that they need the credit system given their pay schedules but this is not possible with the prepaid credit cards as the money has to be loaded.
Probably, some might not well aware that, the great thing of Prepaid Credit Cards is that it allows teenagers to purchase items and to get used to the financial systems that are available to them on the cards. This increases their financial literacy that is going to help them in their future. The lack of credit means that there is no risk of bankruptcy or other financial entrapment.