Advantages and Disadvantages of Using Prepaid Credit Cards

Prepaid cards are a great alternative to make cash purchases easier to manage and track. These cards have become very popular, as people prefer to carry a compact piece of plastic instead of lots of cash, especially while traveling. But unlike credit cards, with a prepaid card you get the advantage of ensuring your expenditure stays within your budget.

These re-loadable cards are backed by reputed companies in the financial services industry like Visa, Discover, and MasterCard, and they are quite easily available. Here are the advantages and disadvantages of using a prepaid card.

Advantages of Prepaid Credit Cards

The biggest advantages of prepaid cards are portability and safety. No more having to carry a bulging wallet that draws the attention of other people. Just use your prepaid card when you need to pay. Easy online top ups are possible so you can give a prepaid card to your spouse or children for their expenses when they are traveling and simply load more cash when they need it.

Prepaid cards can be used in most outlets where you can use debit or credit cards. This flexibility allows you to use these cards for just about anything that you need to purchase.

Not having a bank account need not limit your ability to make card purchases anymore. Prepaid cards can be used by anyone provided you have loaded the card with enough cash beforehand. You will also avoid credit checks and other hassles associated with credit cards.

Many people prefer to use prepaid cards for online transactions where data security is at risk. You can use these cards when you fear that credit card or debit card information may be misused online.

Disadvantages of Prepaid Credit Cards

One of the major disadvantages of prepaid cards is the charges associated with it. Many of these may not be disclosed entirely when you get your card so you may be hit unawares. Typically, activation, deactivation, reloading and use will be charged. You may also be charged for ATM withdrawals, transaction declined intimation, non-usage for a long period, and even for getting your money back if you decide that you don’t want the card anymore.

In order to check your prepaid card balance, you have to either shop or go online. Situations where you end up at the billing counter with insufficient balance to cover your purchases can cause a major embarrassment.

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