Prepaid Cards

By Bianca Gonzalez

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Description

A prepaid credit card works in the opposite way of a normal credit card, because instead of buying something with borrowed funds , you buy things with funds that have already been paid.

Advantages

  • You set your spending limit, not the card provider.
  • You can't get into debt.
  • Some providers take applications from customers in their early teens.
  • Some pre-paid cards allow you to improve your credit rating by charging a monthly fee, which is treated like a tiny loan.
  • A lot of prepaid cards offer cashback benefits for purchases you make on the card, particularly online.

Disadvantages

  • There's a Fee for setting a pre-paid card.
  • There are certain transactions you can't use your pre-paid card for.
  • Credit cards benefit from purchase protection by law under section 75 of the Consumer Credit Act, but prepaid cards don't have to offer this.