Prepaid Credit Cards Top 5 Reasons Not To Get One
Prepaid Credit CardsPrepaid Credit Cards: Top 5 Reasons Not to Get OneTip! Unlike other credit cards, prepaid credit cards do not generally have an APR (Annual Percentage Rate) factored in, but there may be a monthly service fee. When a monthly fee is attached to a prepaid credit card, a comparison of the various fees and what they cover must be used in any comparison between similar cards. A reloadable prepaid credit card is really a debit card that works like a credit card. You pay in advance and can spend only as much as is available on the card. Prepaid Visa and MasterCards are available and offer the same type of protection as credit cards, without the finance charges. There's nothing wrong with a prepaid credit card, but it's not the best product for everyone. #1: You can get a credit card, and can pay your bills on time Prepaid cards charge higher fees than credit cards - as long as you can pay your credit card on time and don't have to pay finance charges. If you're afraid you'll go overboard, then a prepaid card is right for you. But if you can get a credit card and know you won't go overboard and will always be able to pay on time, you should to consider a credit card. And even though prepaid credit cards have high fees, they are not predatory like check cashing. Tip! One drawback with prepaid credit cards is that, unlike ordinary credit cards, you may be asked to pay a processing fee when you apply. This is in addition to the money you will have to deposit with the issuer as security. A good way to calculate how much a prepaid credit card will cost you is to first think about how you're going to use the card. For example, if you think you will use it at an ATM 3 times a month, at stores 10 times a month, add money to the card twice a month and call up customer service once a month, you can add up the cost of each of these. Don't forget to add any monthly fees or start-up costs to get to your annual costs. If your planned usage is similar to the example, an annual cost of $200 is reasonable for a prepaid credit card - $15/month and $20 to get you started. #2: You can control your spending Prepaid credit cards only let you spend as much as is on your card (and beware of those that let you go over and charge you NSF fees). If you have the discipline to stick to a budget go with a credit card. If you need someone to make sure you stick to your budget, go with a prepaid credit card. Tip! You obtain these prepaid credit cards by 'pre-loading' them, which means you deposit cash into your account up-front, similar to a pre-paid calling card. Then you use your prepaid MasterCard or Visa anywhere these cards are accepted. #3: Few Rewards Few prepaid credit cards offer rewards. Lots of credit cards offer rewards - free tickets, cash back, gifts, you'll be able to find something if you look around. But you'll have to look real hard if you want a prepaid debit card with rewards. #4: You could earn interest on your money Prepaid credit cards rarely, if ever, pay interest on your deposits. With credit cards, you pay after you've made your purchase and could some interest by keeping the money in a bank. It may not be much, but it may help. #5: You want to improve your credit score Some cards claim to help you improve your credit scores. While debit cards normally don't hurt your credit score, they don't help much either. If you're thinking of a card that promises to improve your credit ask what they report and which bureaus they report to. If you think a prepaid credit card is right for, do some research on the different prepaid cards available. You can read reviews of prepaid credit cards, other articles and discuss prepaid cards at prepaidcardforum.com Ram P Prepaid Card Forum This article may be reprinted and distributed provided the article is included in its entirety, unchanged (website links should be in clickable hyperlinked format). Get Free Articles From ArticleBuilder.net
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