The prepaid debit card was an innovation introduced by credit card companies in the 1990s to help people in the US who could not qualify for a credit card. A prepaid debit card is just a secured credit card that offers a spending limit to the extent of the cash the credit card company held on deposit.
As a general rule, to start with a prepaid debit card holder is given a credit limit equal to the sum aid as collateral. Once a strong credit history is established, many card companies extend the credit limit up to 200% of the amount deposited. Also, as the money is used, more deposits can be made online, at ATMs or by phone.
Among the various advantages of prepaid cards are the following:
1. Prepaid debit cards have wide commercial acceptance and can therefore be safely transported around the world.
2. Since you’re charging transactions to money on deposit, you won’t have to worry about unpaid bills, debt, or bad credit.
3. A prepaid debit card is issued to everyone and there is no credit check involved. The only criteria is that you are over 18 years of age.
4. Using a prepaid card to cover expenses means that you save the money that the bank charges you when you write the checks.
5. The balance of a prepaid card can be recharged or extended from anywhere in the world. You can do what you need from an ATM, online, or even using a phone.
6. Using a prepaid debit card means you never have to worry about ruining your credit report or score. When you use the card, you are not using an advance offered by the credit card company, but the money you have deposited with them.
7. A prepaid debit card can be used securely to top up funds on your mobile phone, to buy groceries or gas, online to pay for purchases, to make travel arrangements including tickets and hotel reservations, to transfer funds to family or friends, and to withdraw cash from ATMs worldwide.
8. Prepaid debit cards are great for kids and employees, as they limit the amounts they spend and you’ll receive detailed statements of card usage.
9. It is a convenience available to people who do not have a bank account.
10. A prepaid debit card can help you rebuild your credit.
11. Prepaid debit cards are risk free and even if stolen, they will not generate a bill as they are protected by a PIN number.
12. A prepaid debit card can be safely transported around the world, even in places where credit card theft is common. The prepaid debit card gives you peace of mind on the go.
The prepaid debit card is a credit card that does not carry debt and does not generate tension. It allows you to get all the benefits of carrying a credit card while ensuring you live within your means. By using a prepaid debit card, you’ll never have to deal with interest payments, live beyond your means, or declare bankruptcy.