Prepaid cards: Pros and cons

Prepaid cards are not technically credit or debit cards. They are in between. There are a number of pros and cons to selecting these and are really only considered by those who are looking to repair their credit rating. It is worth making sure that they are right for you before you apply for a card.

The pros

Rebuild your credit rating They can rebuild a person's credit rating quickly, especially those who cannot gain credit approval even for the cards with the highest interest rates. Extend your credit You will be able to extend your credit as you are able to prove that you are responsible with your money. Works in the same way as a debit or credit card They work the exact same way as any credit or debit card which you apply for. You can use them in most stores and will still be able to use them abroad. Possibility to apply for other credit types As you build your credit rating, you will be able to start applying for other credit types and for MasterCard credit cards or the best Visa cards. Some designed to students or gift cards There are some special Visa cash cards which are designed for students who need to borrow money from parents. You can also give them as gifts, similar to gift store cards. The person is only able to spend as much money as what is on the card. No need to carry money with you You will not need to constantly carry money with you, which is much safer, especially when traveling abroad.

The cons

Limited amount of money You can only load a set amount of money on the cards and spend it. This will be arranged with your provider. You will need to keep track of this balance. Time-consuming Adding more money onto the card can be time-consuming and a little confusing for some. You can do it either online or in cash. Fees There are fees for using the cash cards and these fees are usually taken from the money which you put onto the card. The fees are for applying for the card, using the card for transactions and even topping up the card. If your card is inactive for some time, you will need to pay a fee to reactivate the card. Not the same protection There is not the same protection when it comes to buying items as you are with your credit card.