In the following article, we will try to understand what are prepaid credit cards. In addition, its complete mechanism, and important features of prepaid credit cards, have been discussed in the following paragraph.
A credit card becomes an absolute necessity, on several occasions, and modern “e-commerce” that works over the Internet depends entirely on its use. In a time past the recession, individuals in the United States have suffered from two major credit card related problems.
First, bankruptcy, foreclosure, unemployment, high volumes of debt
In general, shaky wave of the recession have left credit reports, ratings and scores abused, due to which credit card applications are rejected. Secondly, large debts and financial difficulties have led to some sort of phobia among ordinary American public on regular credit cards.
The best option in such a situation is a prepaid credit card. Such a credit card has three main benefits: Since this credit card is a prepaid credit card, the company does not make a credit check, nor is there any credit score requirement, and thus each person can use the card.
The second advantage is that the company gives a positive report to the credit rating agency when you use the card.
Finally, due to the intrinsic mechanism, prepaid credit cards cannot accumulate debts.
On the whole, prepaid credit cards can be used by any person without worrying about accumulating debt, while also taking advantage of the growth of credit score. The unique mechanism of this card service makes it an excellent financial management tool for post-recession periods.
How does Prepaid credit card work
The term prepaid credit card is self-explanatory by its name, it is a prepaid credit card. In a nutshell, when you get a prepaid credit card, you automatically open an account with a credit card company, in which you can deposit money through the way of checks, or the transfer of money from savings accounts or other means of transfer.
This action involving money in the card’s account is called “charging” or “charging” the card with money that you can spend through the card. Each cargo or boot of the card is positively reported to the credit reporting company, which increases / increases your credit report.
Some of the key features of such credit cards include the following
Of having a credit limit, prepaid credit cards may be used until the charged / deposited funds are exhausted.
Credit card companies charge a certain amount to use the cards, which is monthly fee charged for the card and for certain transactions such as ATM withdrawals and balance requests.
Apart from the aforementioned services, there are some additional features offered such as cash back and bonus services.
Technically, a prepaid credit card is not even a “credit” card, but can be called a quasi credit card that credit information may not be positively affected when using credit cards.
There are only two drawbacks to using this card. First, you have to pay with several different fees depending on transactions and also monthly fees. Secondly, after the card’s funds have been exhausted, you must re-load or charge the card by paying credit card companies, which tend to be a little uncomfortable in some situations.