Uses of Prepaid Credit Cards

Prepaid credit cards are some of the most convenient credit card products in the market today. They can be used as substitutes to cash or cheques. Some of the most common benefits of prepaid credit cards to the credit card holders are:

1. Convenience. Prepaid credit cards may be used to pay for your ordinary purchases such as groceries, petrol, or utility bills. With your prepaid credit cards, you can pay for purchases you make online or on the phone or you can draw cash from an ATM machine.
   
   
2. Security. Prepaid credit cards allow you to carry only enough cash to pay for small expenses, rather than have large sums which are vulnerable to loss. There are also advanced security measures embedded in the prepaid credit cards such as personal identification numbers (PINs) when you transact at ATMs and merchants.
   
   
3. Access. You are able to enjoy the conveniences of regular credit cards, but with prepaid credit cards you do not have to prove anything. You do not have to open a deposit account with any bank and a favourable credit history is not necessary.
   
   
4. Expense Records. Issuers of prepaid credit cards provide you itemised statements of all charges made against the credit cards. You can also use the online reporting system available for these credit cards to help you track your expenses for better management and control. You can actually put in a self-imposed control mechanism by limiting the amount that you load onto prepaid credit cards; once you use up the entire amount, you can no longer charge anything to the prepaid credit cards unless you top up with a fresh load.
   
   
5. Recoverability. Like regular credit cards, your prepaid credit cards may be replaced in the event they get lost or stolen. You will still recover any amounts left on the prepaid credit cards.

One use for prepaid credit cards is for your children going off to college or boarding school. Instead of having to send the student some money periodically, you can give prepaid credit cards. The child can use for everyday purchases; if there is need for cash, the student can withdraw money from an ATM. When it is time to top up, you can re-load the prepaid credit cards using cash, or money transfers from your bank account to the prepaid credit cards, or you can charge the amount to one of your regular credit cards.

Prepaid credit cards are also popularly used as gift cheques. Instead of purchasing gift cheques, you can give prepaid credit cards which have been loaded for the amount you would have used to buy a gift for a good friend. You can choose to give prepaid credit cards instead. You avoid the crassness of giving money to your friend; at the same time, you give your friend the freedom to choose the gift that they desire.

Prepaid credit cards are also available for use when you travel, even for international travel. Prepaid credit cards do not really give credit since it is your money that you are using. But using prepaid credit cards gives you benefits that are hard to ignore, especially the instant credibility (that you can pay) that you can get from credit cards.

Back To Financial News September 2007