Credit cards can be very beneficial for people when they need to make a purchase, but they do not have the immediate funds at their disposal. If you are going to have the money to pay the credit card bill, then having a credit card can be extremely helpful for establishing a good credit score, which is needed for things like mortgages, loans, and even for other credit cards. However, some people do not have the funds to be able to pay off a credit card, or they may not have a good enough credit score to get one. Credit cards make shopping very easy because they are accepted widely at stores; they allow you to pay bills online and even shop online. If people cannot get a credit card, or do not want one, they have the option of getting a prepaid credit card. Before deciding on a prepaid credit card, look through the list of five essential things you need to know about prepaid credit cards to see if it is right for you.
1.) A Prepaid Credit Card Is More Like A Debit Card
Although prepaid credit cards are called credit cards, they actually function more like debit cards. You load up the card with money, and then when you swipe the card at your favorite store, the amount you spend is then deducted. You can never spend more money than you have on the card, much like a gift card. You can reload the card as many times as you want, and you can use them anywhere that major credit cards are accepted.
2.) You Need To Look For Cards With Different Features
Many of the different prepaid credit cards have different features, and you will need to look at them before you decide on a certain one to purchase. Some will allow you to withdraw cash from an ATM, and you will be given a unique PIN. You can also pay bills online with some of the cards, and even set up recurring payments on them. The card company will issue a paper or electronic check to whomever the payment is going to. Make sure to read what your card is able to do, and get a card that will fit your lifestyle.
3.) The Card Is Protected
If you report your card as lost or stolen, it will be protected just like if you had a regular credit card. Most companies will restore the original balance and you will receive new card. You are also having the same protections offered by a bank. This means that your card is FDIC insured up to $250,000.
4.) Reloading Is Easy
When you need to put more money on your card, it is just as easy as depositing money into a bank account. You can deposit your paycheck onto the card, you can transfer money from a bank account, you can have your employer directly deposit your check onto the card, or you can reload the card in a retail store. You will not have to worry about your money not being available when you need it.
5.) Watch Out For Hidden Fees
Like a regular credit card, there are some fees that are charged to you because the company will have to make money. These fees can come when you buy the card, which is often called a set-up fee, when you add more cash to the card, or when you withdraw money from an ATM. You may also have to pay a monthly maintenance fee. Make sure to research what fees your specific prepaid card may have so you won’t be surprised if you are hit with a fee.