What Are Prepaid Credit Cards?

By Steven J. Talrechi

Credit can be a touchy subject for many individuals. Often it can be quite difficult to be approved for a traditional credit card. Perhaps you have had a poor credit history in the past, or perhaps your problem is that you just haven't had any credit history yet. Whatever your circumstances are it can feel downright degrading to get rejected for a credit card. However, there is a way that you can start building your credit rating and give you the flexibility that a credit card affords you, and that is by getting yourself a prepaid credit card.

But how does a prepaid credit card actually work? It is essentially an account into which you can deposit money and access it by using the card to make purchases. You can use a prepaid credit card anywhere that credit cards are accepted. Unlike a traditional card, however, you can only make purchases after you have deposited money in your account. There is a spending limit just as with a traditional charge card, but with a prepaid card, this limit is the amount which you have put on your account.

A prepaid credit card offers all of the convenience of a regular charge card. You can use it in the same way at the same places.

A prepaid credit card is very helpful in keeping your spending under control. You can only spend as much as you have deposited in your account, so it is impossible to get yourself into credit card debt by overspending. A prepaid credit card is also a good way to begin learning about managing your financial life responsibly.

You are also largely insulated from identity theft when using a prepaid credit card. Whether you are buying in person, online or over the phone, you can rest assured that even if someone gets a hold of your credit card number, your other accounts are perfectly safe; they can't run up huge bills on your prepaid credit card.

So how to you set up a prepaid credit card. Well you will incur a fee to set up your credit account. Typically it is quite small. Anywhere from $5-$10. Additionally, there are usually fees that accompany any deposit that you are making into your account. Though there are some slight fees for those who have been struggling with their credit or merely want to keep a tight handle on their spending it really might be a viable solution for you.

Let's face facts, we live in a credit driven world today. It seems like you can't do anything without a credit card these days. So if you want to be able to function in this world you need to find a way to have access to a credit card. For those who are struggling with bad credit, or want to keep better tabs on their spending then a prepaid card might be exactly what you're looking for!

About the Author:

Steven J. Talrechi is an expert on credit for over 10 years. He writes about various topics on said field, including applying for a credit card, and different credit card offers.