If you already have a credit card, you may be wondering why on earth you’d need a prepay credit card?
Well, it depends!
Some of us find the conventional credit card both a friend but also something of a curse. Many of us will admit, perhaps privately, that sometimes that credit limit has burned a hole in our pocket and encouraged more spending than was entirely healthy.
Of course, it’s possible to argue that this can be avoided if we leave our credit card at home and just take our chequebook and cash out with us.
Even there through, there are some problems:
- cheque books and even cash, may encourage the use of expensive overdrafts;
- cash in particular, is very vulnerable to theft;
- some payment facilities no longer accept cash and cheques (eg. web sales, ticket machines or 24/7 garage pumps etc).
This is where the prepay credit card may be able to step in to help.
It works quite simply.
While it is not a credit card at all and should really be known just as a prepaid card, it is similar to an ordinary credit card as you can use it for internet and telephone purchases and other non-cash places such as some car park machines etc.
The big and important difference is that with a prepay card you can only spend what you have already loaded onto it. So, you can go into a PayPoint outlet and load money onto your card, or transfer the money in from your bank account. In some cases you may even have your employer load your wages directly on to it. From that point on it will function like any other plastic payment card except you can’t spend more than you have on it.
It’s potentially a very useful method of controlling your spend or passing spending power to your kids that’s both safer than cash and which won’t allow them to go crazy.
Some providers even offer SMS messaging to alert you every time a purchase is made on your card, letting you know exactly where you are with your spend or alerting you to fraud.
Another bonus – if you have blemishes on your credit record, it may stop you getting a conventional credit card. Yet with a prepay card, as there’s no credit involved you may probably still be eligible if you do have credit history problems.
Having access to a plastic payment method says something about you to those around you. The prepay credit card may allow you to achieve that status and flexibility without the need for extensive credit arrangements and the worries that may come with a conventional card.
