If you are thinking about a prepaid credit card then you will need to know how do prepaid credit cards work so that you know exactly what you are getting and what is expected of you.
How do Prepaid Credit Cards Work
1. When it comes to how do prepaid credit cards work, you need to know that they are a hybrid. A prepaid credit card works more like a debit card. The amount that is on the card is what you have loaded onto it, which can be topped up. These cards can be used anywhere like with SureSwipe, as they are associated with one of the major credit card providers.
2. A prepaid credit card makes things easier as they are not linked to a bank account, so you will not need to deal with the banks.
The prepaid credit card allows you to do things that usually require a credit card like hire a car or make hotel reservations.
3. If you do not have a credit history or a low credit score, you can still get a prepaid credit card as there is no credit check to qualify. This also means you can’t build a credit score.
It is then a way for you to use it like a credit card but it is your money that you load and spend.
4. Prepaid credit cards will usually allow you to make purchases, withdraw from an ATM, pay bills online, and authorize payments to creditors and other features.
It is important to check the features on offer to understand how do prepaid credit cards work.
5. The card can be reloaded either by:
- Transferring money from a bank account
- Ask your employer to make a direct deposit onto your card with your pay check.
- Transfer from PayPal or
- Reload in a retail store that offers the service.
Prepaid credit cards have some pretty hefty fees so shop around.
The fees attached can be to buy the card, to add more cash to the card, to withdraw from an ATM and also to check your balance. Also there could be a monthly fee for the card as well.
Check all the fees associated with the card before you take one.
7. A prepaid credit card can help in managing your money. You could use it as a budgeting tool where you can load the grocery budget on and only use it as such. When the money has ran out, and then you’re spending also stops.
8. Even though a prepaid card is not strictly a credit card you will still receive theft and loss protection.
If you report a loss or theft of the card then the original balance will be restored and a new card issued.
When it comes to how do prepaid credit cards work it is an alternative and whilst it has the properties of a debit card it still acts to some degree like a credit card, which gives you more flexibility
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