Prepaid Credit Cards – The Pros and The Cons

by Joe on June 23, 2011

In the recent past the use of prepaid cards has risen significantly. According to Federal Reserve, these cards were used to make $65 billion worth of transactions in 2010, up 35% from the previous year 2009. This rise can be attributed to a number of things: the growing number of the ‘unbanked’ population, a messed up credit that resulted to very high interest rates, and the fear of identity theft.

Knowing the pros and the cons of this type of payment method can help you decide if this is a route that you would want take.

The Pros

  • There is no approval process
  • You don’t have to have a credit history
  • You can’t get into debt because you are putting your own money on these cards. When it’s gone, it’s gone
  • It helps with budgeting
  • No interest accrued on these cards

The Cons

  • You don’t build credit
  • The cards are not accepted everywhere you want to shop
  • While these cards do not have interest accruing, there are higher fees associated with them.

These are some of the fees that you might expect

  • Activation Fee
  • Monthly Fee
  • Cash Withdrawal Fee
  • Balance Inquiry Fee
  • Customer Service
  • Non-use Fee

These fees will vary across the board, and so you have to read and understand the fine prints or you will be cursing the day you signed in.

You May also like:

{ 1 comment… read it below or add one }

Ryan Jones November 29, 2011 at 3:07 am

Hi Admin,

This is Ryan , a financial writer and consultant , I have visited your site : http://www.kickdebtoff.com and I must say that your site has got really good and worthy information. I work for many financial communities and I write useful articles for them and so I was just wondering that if I can do something for your wonderful site I will be very happy. I would like to give you an unique article upto 400- 1000 words (according to your requirement). I assure you that the article will be published only on your site.

Please feel free to get in touch with me regarding this offer at anytime. I will also promote the guest post of your site to some social networking sites like facebook, twitter, Stumble upon etc.

Looking forward for your valuable and sincere reply

Thanks & Regards

Ryan Jones

Financial Writer & Consultant

Reply

Leave a Comment

{ 2 trackbacks }

Previous post:

Next post: