It seems that people are much more concerned about keeping their credit intact today. Because of the current economical struggles that many Americans are experiencing, creditors are far less willing to take the risk on someone who has not proven themselves to be credit worthy. Many people are opting to not use credit cards but would still like to take advantage of the conveniences that come with having a credit card. The most convenient option for those who want to keep their good credit or begin rebuilding their credit profile is the prepaid card.
The prepaid credit card has either a Visa or MasterCard logo and can be used where ever credit or debit cards are welcomed. There are actually two types of prepaid debit card accounts. The most popular type is one where the account holder funds the account through one of several different methods. The cards can be funded through direct deposit of Social Security benefits or employment wages. The direct deposit options are always free. Most cards can also be funded via Western Union or Money Gram at a minimal cost. When using either of these methods, the funds are usually available for use right away. Many of these prepaid card companies also allow users to load their state and federal tax refunds onto the card. Most card companies also allow users to mail deposits via certified funds such as cashier’s checks or money orders. These two methods require some processing time and some companies hold the funds for seven to ten days to ensure that the instrument clears.
Once the card is funded and all funds are available for use, the user can them swipe the cards at their favorite retailers. Most transactions are PIN based while others do allow for signature transactions. Most cards do not charge transaction fees for signature transactions but there are usually fees associated with the PIN based transactions. The fee schedules for the use of the prepaid card varies depending on the vendor. Some vendors simply charge a monthly usage fee instead of per transaction fees. Some companies opt to use transaction fees and there are yet others who charge both. There are certain criteria that may be set forth by companies to eliminate some of these fees.
One thing that all users must be aware of when using prepaid credit cards is their special circumstance charges. If you are purchasing gas with your card, you will want to use the card inside as opposed to swiping the card at the pump. If you swipe at the pump it is customary that $50 to $100 may be authorized on the card, even if you are getting just $5 in gas. Another thing to be aware of is using your card at a restaurant because some cards will automatically add a gratuity to the purchase amount. There are also special circumstances with using the card at car rental agencies and hotels. Make sure that you do your research before choosing a card if you will be using these types of services. An insightful news article about prepaid card from the distributors point of view can be found on Yahoo! News here
The other type of prepaid card is a secured credit card account. This type of card gives you a credit limit based on the amount that you fund into your account. As you make timely payments to your account, the company may slowly add a small line of credit to the prepaid amount. This type of card account does report to the major credit bureaus and is a great way to rebuild or create a great credit profile. Beware of sceured card scams, learn how to avoid scams from the FTC.
