What Is A Prepaid Credit Card?
A prepaid credit card is a debit card issued by a financial institution, and it allows holders to make purchases or withdraw cash at the ATM.
A prepaid card is a safe alternative to carrying cash around. It is a debit card that allows holders to make purchases online or at a point of sale that supports it. Typically, banks issue them, and major credit card companies, including Visa and MasterCard, brand them.
You can get this type of card even if your credit history is not good, as providers do not check your credit history before issuing it. Prepaid cards differ from credit cards in the sense that it does not offer you a loan. As the name implies, you can only spend the money you have prepaid on the card. You can use the card repeatedly, so long as you keep adding money to it.
Prepaid cards can be helpful if you do not qualify for a traditional debit or credit card but want to enjoy some of their benefits. Also, it is useful when maintaining a strict budget because once you exhaust the balance on the card, it becomes worthless, and you cannot make purchases until you add more funds.
A prepaid card can perform any transaction that you may otherwise do with a credit or debit card. It is easy to mistake a prepaid card with a credit or debit card because all look identical.
Let’s say, for instance, you want to be able to make purchases online, but you don’t want to get a credit card because it may tempt you to make more purchases beyond your budget; you can get a prepaid card. With a prepaid card, you can deposit a certain amount of money into the card and make online purchases anytime you want. Once you exhaust the deposited funds, the card will stop working until you make another deposit.
Prepaid Credit Card Example
John wants to make purchases on the internet but is unwilling to get a credit card. He orders a Revolut prepaid card and deposits $500 onto the card. John can now use the card to purchase items until the $500 is spent. At this point, John must deposit more money onto the card to continue making purchases« Back to Glossary Index