Prepaid Cards – How They Works
A Prepaid credit card is a great alternative to a bank account. They were designed for individuals with damaged or no credit history.
This is how prepaid credit cards work; first you deposit funds into your account/card. You use your card to pay bills or make purchases. Then the funds are taken from your account to pay for the purchases.
You can deposit funds by a variety of methods including money gram, western union, and direct deposit. Using direct deposit you can save hundreds of dollars on check cashing fees. It is free to sign up and use direct deposit.
Most cards offer an additional feature that allows you to use your account just like a checking account. You can write physical checks to companies or individuals. This can be used to pay bills such as car insurance, cable or rent. This will save you money because you will no longer have the need to pay for money orders.
You can also use you card at ATM’s to access cash. You will never have to pay interest or overdraft fees with a prepaid credit card.
It is common for prepaid cards to come with another free service called credit builder. Credit builder will keep a record of your bills paid through bill pay and will report these payments to a credit reporting agency. This can be used to show credit worthiness to future lenders.
Prepaid credit cards are also issued with a mastercard or visa logo. So you can use your card to make purchases everywhere a visa or mastercard is accepted, including online and over the phone. Your card will not say it is a prepaid credit card and will look just like any visa or mastercard.
The best part about a prepaid credit card is it doesn’t matter if you have bad credit, little credit or no credit. They guarantee approval for everyone. There is no credit check or chexsystems verification.
In sum, it is much safer to carry this card than walking around with cash. You card works just like a checking account and is accepted everywhere credit cards are. You are also guaranteed to be approved.
Filed under: Management