Are you looking for information regarding prepaid debit cards? If you are then we encourage you to read the rest of this short article. Below you will find some interesting facts and features of these card programs. Not only that. You will also discover below the pros and cons of using prepaid card accounts.

What are Prepaid Debit Cards?

Many consumer experts believe that prepaid debit cards are among the most unique card programs offered in the market. After all, these cards function just like traditional debit and credit card programs. How is this possible?

We all know that before we can use debit cards in making purchases and in paying our monthly bills, we have to load sufficient funds on our respective card accounts first. The same is true with prepaid debit cards. Cardholders need to load adequate sums of money onto their prepaid accounts before they can use their cards in conducting business with commercial establishments and online shops which rely on card transactions.

Prepaid debit cards also function just like regular credit cards. Consumers can use their prepaid cards in a wide range of shops, stores and service centers. For example, prepaid cardholders can use their respective cards in paying for their groceries, restaurant bills, and even for gas purchases. Not only that. Consumers can also use their prepaid cards in signing up for online purchases, in making hotel reservations, and even in booking domestic and international flights.

People with poor credit rating can also use their prepaid cards as direct substitutes for conventional credit card programs. Through their prepaid debit cards, they can gain access to business establishments that rely solely on card transactions. This is the main reason why at times prepaid debit cards are called credit cards for bad credit.

Benefits and Drawbacks Associated with Prepaid Cards

Now let us consider the benefits and drawbacks associated with prepaid debit cards. First let us tackle the advantages of using credit cards for bad credit.

Most consumer experts believe that prepaid debit cards are excellent tools for budgeting and managing personal finances. The reason for this is that prepaid cards have built-in spending limits that can help consumers gain control over their spending habits.

Prepaid card programs also help protect consumers against identity theft and credit fraud. After all these card accounts are not directly linked to the checking or savings accounts of consumers and they are always PIN-protected.

What about the disadvantages of using prepaid debit cards? Some of the most common drawbacks associated with this type of credit cards for bad credit include the following: large number of fees and additional charges, no interest earned on the initial deposit provided by cardholders, and their exclusion from the provisions of the Consumer Credit Act.

Also, prepaid debit cards cannot help consumers repair bad credit. This is because in these plastic card programs, consumers are not actually managing credit lines from lenders. Instead they are only using the money that they have loaded onto their prepaid card accounts. So even if consumers will responsibly manage their prepaid debit cards, their activities cannot help them repair their bad credit history.

Still, it is worth mentioning that the benefits of prepaid card accounts usually outweigh their disadvantages. So, consumers can have the assurance that this type of credit cards for bad credit can and will work to their advantage.