Advantages And Disadvantages Of Prepaid Credit Cards In Our Personal Finance
The name prepaid credit card is self explanatory, it is similar to a credit card with the difference that the amount has already been paid and is not borrowed. This is similar to the prepaid and the postpaid telephone connections. The best part about these cards is the ease with which they can be brought. Since all the payment is done upfront, there are no security issues on behalf of the service providers.
These cards can play a significant role in our personal financial planning and hence there is a need to understand their advantages and disadvantages. It is necessary to understand what the card has to offer and how it would affect the plan that is already or going to be implemented by you in your debt or credit ridden life.
1) Apart from the ease with which they can be brought, the biggest advantage is that they can be used with the same ease (maybe more) at the various places which accept credit cards. These are acknowledged at all stores which provide the facility of card swapping.
2) Since the payment is already done to the financial institution before hand, the sum of all the purchases is deducted from the savings account. There is no credit that is levied on you and hence there is no need to pay any interests. Infact in some instances, the companies pay interest to the clients!!
3) The owner of such a card can never go into debt as there is no credit that can be taken. This reduces any possible over expenditure and results in keeping the personal finances under check.
1) One needs to have money to deposit in the account in advance before any purchases can be done with the right card. This can be troublesome for many as taking out huge sums of money in one go is not feasible. They can greatly destroy any immediate plans that one might have thought of.
2) The cards fail to work when reoccurring payments need to be made. They require the owner to pay the debts manually as the automatic systems refuse to accept such cards.
3) Unlike the credit cards, there is a specific fee attached with these cards at the time of purchase of the same. Since the companies do not get any payment for the services offered, they tend to cash in with such conditions.
The prepaid credit cards are available to one and all is the best option for those who cannot avail a credit card due to various reasons like a bad credit history or inability to keep a tab on their personal expenditure. These cards put a limit to the expenditure that the individual can do by putting it to the amount that has been deposited in the account associated with the card. Other people who want to save and hence secure their future can also opt for this scheme.
If you plan to get one such card for yourself in the near future, make sure to check all the cards that are on offer and then go for one that suits your interests the best.