Benefits of a Prepaid Credit Card

Posted in Loans on Saturday, June 2nd, 2012 at 13:45 by James Williams.

If:

• you have a poor credit history and find it hard to get a standard credit card;
• you don’t have a bank account;
• you find it hard to budget without getting into debt;
• you have a teenager who you want to support financially but also want to give some independence and autonomy in order to teach them how to budget for themselves;
• you don’t want to get into debt but do want to pay for purchases (online or in person):

then what you may need is a prepaid credit card. The term ‘credit’ is not strictly correct in this context because no credit is ever offered or given: the only money that you’ll ever use on a prepaid credit card is your own and once it’s been spent there will be no ‘buffer zone’ of an overdraft and no option to borrow money to top up your funds.

A prepaid credit card is one that you load funds onto (from your bank account or with cash through Paypoints or Post Offices) and then use in shops or online or to withdraw cash from ATMs. There are two broad types: pay monthly or pay as you go.

If you choose a ‘pay monthly’ prepaid card, you pay a monthly fee (for example, with pockit.com the monthly fee is £3); if you choose a ‘pay as you go’ card, you have no monthly fee to pay but will pay a small amount for each transaction (pockit.com charges 45p per transaction on that type of card).

There are many benefits to owning a prepaid credit card, including the ability to avoid debt and even repair a damaged credit history. You will be accepted to receive a prepaid credit card if you’re over 18 and are resident in the UK (with Pockit you can take out additional cards for friends or family members who may be under 18) as there’s no credit check undertaken. They’re safe and secure to use, with a chip and pin system plus advanced fraud-detection technology.

What’s more, Pockit offer a pay monthly cashback credit card, where you can earn up to 10% of what you’ve spent in several high street stores – so although you don’t earn interest on any money you have on your prepaid card (because it’s not linked to a bank account) you can earn far more than you would in interest anyway through cashback on your purchases. You may as well earn money for spending your own money on things that you would have bought anyway!

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