Prepaid credit cards begin to rise in popularity during the late 1990s. More people are using them today. What are prepaid credit cards, and what advantages do they have over traditional credit cards? In this article I will go over this in detail.

Credit card companies have realized that many people don’t meet the necessary credit requirements to use their cards. Even people who do qualify often fail to pay back the debts they owe and file bankruptcy. This has caused credit card companies to suffer massive losses.

The credit card companies begin offering secured cards in order to combat this. Customers would be able use their cards without fear of going into debt. Once customers established that they were responsible using these, credit card companies would then begin slowly giving them more credit.

This was the forerunner to the prepaid credit cards used today. The primary difference is that users are given credit for purchases made using these newer types of cards. You are able to set the limit you want on the card by adding the necessary funds into the account.

In the past, credit card companies set the credit card limit, and it was up to the consumer to make sure they didn’t go over it. It was very difficult to track your purchases, and you weren’t able to add any funds other than what the credit card company added.

Because of this many people would go over their limits, spending money they didn’t have. This caused people to get into serious debt they couldn’t escape from. By using prepaid credit cards, you only add the money that you actually have, instead of being credited money by the credit card company.This allows you to keep better control over your finances.

This creates a situation in which both credit card companies and consumers win. Credit card companies minimize their losses by allowing consumers to add their own funds. Consumers win by using their own money and setting their own limits instead of relying on the funds given to them by credit card companies. This greatly reduces their chances of going in to debt.

Having good credit is an important part of succeeding financially today. You want to use tools which reduce the chances of you getting into debt instead of increasing them. Using prepaid credit cards are a tool which will help you achieve this, and keep better control over your finances.

Prepaid credit cards also called stored value card can be ideal for individuals who are unemployed, have bad credit or difficulty obtaining an unsecured credit card. Prepaid credit cards are also excellent for individuals who have a hard time controlling their spending and prevent the individual from overspending and getting into credit card debt. If your objective is to establish or rebuild you credit over a period of time, make sure the prepaid card issuer reports cardholder transactions to the credit bureaus namely Experian, Equifax, and Trans Union.

It is very easy to obtain a prepaid credit card because there is no credit check or employment verification since the funds you will be using are yours and not that of the prepaid credit card issuer. Prepaid credit card spending limit or credit line is the amount of money you loaded to your prepaid credit card account. Prepaid credit card carries the Visa or MasterCard logo. It can be used anywhere MasterCard and visa is accepted except renting a car at certain car rental companies and setting up automatic recurring payments.

The difference between a prepaid credit card and a debit card is that the spending transactions are deducted from the amount of money you loaded to your account unlike a debit card where the money spent is subtracted from your checking account and could cause Non-Sufficient Funds (NSF) charges. The NSF charges are due to a customer drawing funds from an ATM or making purchases that exceeds the balance in their checking account. With a prepaid card this will never happen since the prepaid card holder is not borrowing any money and can only spend the amount of money loaded to their prepaid account.

With prepaid credit card there are no interest charges because you are using your own money. To obtain a prepaid credit card requires paying a setup or application fee and may charge a fee each time you load more money to your account. Some of the ways prepaid credit card can be funded is with a wire transfer and a cash deposit at certain locations approved by the issuer.

The prepaid card started a whole new form of issuing credit without the normal charging structure. Most prepaid cards are issued by local banks that hold the customers other accounts. A consumer must have a checking account and a savings account in most cases with the bank before they can obtain the prepaid credit card. It seems that even though the cards contain one of the three major logos such as Visa, MasterCard, or Discovery it is the local bank who stands behind the card.

Your local bank does the processing of the transactions that appear on your card. You get your statement from the bank that you do business with along with all your other statements. It is up to that bank to allow perks attached to the card. Most banks require that you keep a minimum balance in your checking account or that you maintain a savings account to prevent any type of overdraft.

The onset of the internet has made it impossible for people to shop without the use of a credit card. Some people do not like the idea of having a credit account that they normally have to make payments on a constant basis. That is why with the birth of the prepaid card has become very important to many people. Not only are there consumers who do not want to go in debt for a credit card but there are some who have had credit problems making it difficult for them to get a card. The birth of the prepaid card has help to resolve many problems for those who needed the use of the card.

Many of the credit card companies recognise the need to have some type of credit card for teenagers in this day and age. There are several cases in which cash or cheques are no longer accepted, especially with online purchases making it very difficult for a teenager to get anything, such as gifts. These prepaid credit cards for teenagers do have to have the parent’s permission in order to obtain them, but the fact that they exist can help many parents and teenagers get along financially.

With prepaid credit cards for teenagers there are couple of things that should be examined before you obtain just any of the cards. Many of the online companies offering prepaid credit cards have extensive fees in the start up costs, transaction fees, monthly fee, and the reload fee. To help you find a prepaid credit card for your teenager we have looked at some of the cards available to determine the best cards out there. Here are few of the cards we have found.

The Rush Card Prepaid Visa has a start up cost of $19.95, with a transaction fee of a dollar, but a free reload fee. The Western Union Prepaid MasterCard allows a start up fee of $9.95, service charge of $4.95, and a reload fee of $4.95 at any Western Union location. The wired plastic prepaid visa card has a start up fee of $9.95, service charge of $3.95, and a reload fee of $6.95.

There are more than just these few prepaid credit cards for teenagers available, but these were the ones that had the best start up and other fees. It is possible to get prepaid credit cards from Capital One and other well known banks, however they will also have some high fees associated with the cards.

The prepaid credit cards for teenagers have several things in common with ATM cards. The first is that you are the one keeping the control and how much balance is on the card. In order to use the card you have to have some type of deposit whether it is just a few dollars or more than hundred. It will of course depend on your teenager as too how much you would like them to have. Once the balance has been spent the teenager cannot use the card until it has been reloaded. It is better than a regular credit card in that you are able to say how much they will use at any given time. You don’t have to allow for more than that few dollars every month. This saves you from high credit card balances that can’t be paid off. There are direct deposit options with the prepaid cards if you would like their earnings to go on the card.

It is good to remember the fees and of course let your teenager know about the fees. Chances are if they are using their own money to fund the card they are not going to want the transaction fees that come with it.

Whether you are in bankruptcy or out already, you know how difficult it is to get credit. Stop fighting for that traditional visa and opt for a secured prepaid credit card. Everyone can have one no matter how bad your credit is, and with it, you will have the opportunity to use it just like a regular credit card. No one knows the difference!

Secured prepaid credit cards are like a debit card, because you put money on the card and then use it until you have used up the funds you put on it. To continue using it you must put additional funds on the card.

Your card will have the MasterCard, Visa, or American Express logo and no one will know the difference between the prepaid card and the standard card. And you can use it just like a regular credit card. Booking a flight for your vacation, needing to make a car reservation, or taking your family out for dinner, it doesn’t matter what your purchase is your secured prepaid credit card will be treated like any other.

You decide how much money to put on the card and you can add more funds at any time. You are also not obligated to add any money so if cash is tight or you are only using the card for special purchases, that’s okay, it’s easy to reactivate. Because you are prepaying for everything you use the card for, there are no interest charges associated with the use of it.

Sometimes there is some confusion between a secured credit card and a secured prepaid credit card. The latter really isn’t secured in the same fashion that the first one is. A secured credit card will require you to put a specified amount of money on deposit with the bank. The bank will give you a credit card with a percentage of that money as the limit. You will pay interest and make payments like with a traditional card, but if you do not make your payment they will take it from your secured deposit.

Your secured prepaid credit card has no deposit on file at the bank, no qualifications, no employment verification; there is not even address verification. In fact, they do not even care if you are in the country legally. There is usually a fee for each transaction just like there is with a debit card, and almost always you will pay a fee to load the card with more cash. Watch for annual fees, and a variety of other fees. Shop around and find the card with the least amount of costs associated to it.

While the prepaid card isn’t your best choice if you are attempting to rebuild your credit because it doesn’t report to the credit bureau, it is the best choice if you just want a credit card to use because you are in bankruptcy or your credit is so poor you can’t even get a secured card.

Many liken the secured credit card to the modern day version of the prepaid card. One thing is for certain. Bankruptcy is tough enough without the loss of the ability to use credit in a world that is driven by credit cards. If you are in bankruptcy or just out of bankruptcy you should opt for a secured prepaid credit card.

Over recent years credit card fraud has become a major problem, and the level of card fraud, particularly CNP fraud, which is card not present fraud, has been rising.

Card not present fraud is, as the name suggests, fraud that affects transactions where the card does not have to be physically presented such as with telephone and online purchases, where the card details are provided but no card is actually seen by the seller.

Because credit card fraud with CNP transaction has become so prevalent more and more people are becoming nervous about shopping online with their credit cards, according to recent reports. The research showed that one in every three people knew someone that had been the victim of card fraud, and this increased their wariness when it came to making credit card transaction online themselves.

In fact, it has been found that over half of the population is nervous about using their credit cards online, and given this information some officials are questioning whether those that are wary about online credit card transactions could benefit from using a prepaid card rather than a regular credit card.

One official said: “Prepaid cards allow such people to be part of the modern day ‘plastic culture’ which allows you to take advantage of online shopping discounts as well as access to hugely popular sites such as eBay.” He added: “The risk with a credit card is that the fraudsters will be able to max out your card, where a prepaid card is almost like a pay-as-you-go mobile phone. The only money that can be stolen, is the money you have loaded on. And unlike a debit card, a prepaid card does not have any link to your bank account or address, so the chance of fraud is next to none.”

You can compare prepaid cards to find those that offer lower or waive the usage and loading fees.

However, there are also disadvantages to using prepaid cards over credit cards. Firstly, you may find that you have to pay charges for using your own money, which can be somewhat offputting. Another downside is that with prepaid cards you do not get the benefits that you get with many credit cards such as section 75 purchase protection (which can be protection from fraud if you are missold an item or it never gets delivered), the interest free credit that you can get on credit cards or the rewards that can be earned on some cards.

For those that do not want to give up these benefits the key to avoiding fraudulent activity may simply be to ensure that you are careful about your credit card details, and this means not saving account details and passwords on websites, not saving account information on shared computers, and not falling for phishing scams, where you link to a website or bank via an email that has been sent to you.

You should also never give out your card details to someone on the phone if the call was not initiated by you, and don’t give your card details to strangers who stop you in the street or come to your door claiming to be selling something, as you never really know who you are giving your details to. With some simple and sensible precuationery steps you could minimise the risk of card fraud without having to opt for a prepaid card and lose the benefits of a traditional credit card.