A prepaid credit card is a secure card provided by a bank that has to be loaded with money before using it. Unlike credit cards that will be linked to a bank and when using them, you will be using the bank’s money, prepaid credit cards will ensure that you only spend what you have deposited and when the balance gets low, you will have to reload it to continue using it.
Here are some common features that clearly outline how prepaid credit cards work
A prepaid credit card must be loaded with money before you can use it to make your payment. You can go to a participating retailer, set up a direct deposit or deposit through the ATM. There are some prepaid credit cards that will allow online transfers and smartphone deposits.
Access to ATM cards
Some of the prepaid credit cards will be used on all national ATM networks like moneyPass or Allpoint. This makes them quite convenient as you will be able to access your funds at any point, whenever a need arises.
There are some fees that you will be charged when using a prepaid credit card such as card activation fee, monthly fee, deposit fee, and a fee for using the card at out-of-network ATM.
Limitation on usage
There are some prepaid credit cards will limit the amount that will be used within a specific duration which could be daily or monthly.
Unlike credit cards or debit cards that have a fraud protection, prepaid credit cards do not have the protection and this means you may be unable to prove that a particular transaction was unauthorized.
If you need to be in better control over your finances, a prepaid credit card will be the best option as all you have to do is to load the funds that will be required for use at a particular time. You will not be tempted to make impulse purchases as the funds will be limited. However, if you need to build your credit status, you will need to consider another option such as the use of a credit card.