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First off, anyone can apply for a prepaid credit card and be accepted, as there are no credit checks involved when applying for one of these prepaid cards. So even if you have a poor credit score or don’t even have a bank account you will be eligible to apply for one. One great benefit about these cards is that they are partnered with either MasterCard or Visa so they work exactly like a credit card when it comes to purchasing online or booking flights and hotels where a credit card is required and you get the comfort of purchase protection too.
When applying for a prepaid card, the card will become active when either paying a small fee or depositing money onto the card, after that you will be ready to use it with the great benefits these prepaid cards come with. You can use these cards for purchasing in-store and online and you can even withdraw money from ATM machines (with some providers there is a small fee associated with ATM withdrawals). Also instead of carrying large amounts of money around with you, just take your prepaid card with you where ever you go and if it is lost or stolen your money is safe. Any fraudulent behaviour reported by the card holder will not be held liable by the card provider, so it is especially good for when you are travelling too.
So what are the other great benefits of a prepaid credit card? Can’t get a bank account either? Well these cards work just like an online bank account. You can deposit your paycheck directly on to your card. All you have to do is provide your employer with the Sort Code and Account number of your prepaid card and your wages will be paid directly onto your card, so you won’t have to go to the bank to cash your pay check. Also like a bank account you can pay bills online and set up direct debits with some of the prepaid credit card providers.
As mentioned above there are no credit checks involved when applying and you are 100% guaranteed approval, whereas with a traditional bank account or credit card the card issuer will run credit checks. Also as you are not taking out credit you can’t go overdrawn with a prepaid credit card as you can only spend what you upload onto the card. However some prepaid credit cards providers do offer overdraft and short term loan facilities now, but still there is no interest to pay but a flat fee for taking out the loan, so even if you fail to pay back the loan on time you won’t be hit with interest adding up. And one of the greatest benefits of all is that the cards are free of interest charges. As you are not borrowing money and only using what you load onto the card then you won’t have to pay any interest.
Other great benefits include direct debits, additional cards, travel cards, improving your credit rating, cashback, transferring money, secure online account and even business accounts.