What Is A Prepaid Credit Card

What Is A Prepaid Credit Card
By Steve Evans
You probably see them all the time at gas stations or advertised as a solution for people with bad credit. Prepaid credit cards act just like a regular credit card, except unlike a normal credit card there is no line of credit behind the plastic.

They are also known as Pay as you go cards. With a prepaid credit card you have a fixed amount of money you can use. Since there is no line of credit, you don’t have to worry about paying back any debt.


Credit cards are practically a necessity of life these days. When was the last time that you wrote a check. I’d wager that most of us just write one or two checks a year these days and the rest is done by card. It’s almost impossible to rent a car, reserve a hotel room, or make a large purchase without a credit card. Many businesses now require customers to have a credit card on file even if paying with cash or check. What can you do if you have bad credit or no credit?

As we said earlier prepaid credit cards are also known as “pay as you go” cards. They work in a similar way to traditional credit cards. The difference is that prepaid credit cards don’t involve borrowing money from the issuer. You preload the card with money and then use it wherever Visa or Mastercard are accepted. Late fees and interest charges are not applicable. Simply refill the card when the balance is low or depleted.

A prepaid card is much like the gift cards available from most high street chains in the UK, however, prepaid cards have a much wider acceptance, and can be used internationally. They are the same as credit cards,

but without the credit. The majority of UK prepaid card providers offer cards embossed with your own name, and some are even CHIP & PIN cards.

A prepaid card is not a credit facility, so you do not need to pass a credit check. Even if you have bad credit or CCJs you are guaranteed to be approved for a prepaid card. However, you are still required to provide details verifying your identity and address (for example a passport, driving licence or national identity card plus a utility bill or an official letter with your permanent or temporary address). Some of the prepaid card issuers will even verify your details online, and give you an instant approval. By the way this is correctly called an electronic identity check, not a credit check!

A prepaid credit card such as a Visa or prepaid Master card can be used like any other credit card to make purchases. With a prepaid card, however, you load funds onto your card and use that money to make purchases and get cash -- you are not borrowing money from a bank or other financial institution. The prepaid credit cards look, feel and work like a credit card but are pre-funded "stored-value" cards. This allows you to set spending limits for you or your kids.

So there you have your answer. It is a pre-paid, reloadable card can be used anywhere Visa or MasterCard is accepted -- at stores, gas stations, restaurants, theaters, in the mall and online. Making a hotel and rental car reservation is a snap. You can also access cash at ATM's. The card is great for everyday purchases, special occasions, and emergency backup.
Go to "first prepaid credit" for a great deal more information at the Prepaid Credit Cards Blog.

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