Prepaid Credit Card

A prepaid credit card is a versatile option that works like a regular credit card. What makes it different is that the credit card limit is determined by the money you’ve loaded into it. 

So, you get to decide the spending limit, which puts you in control of your expenses. Shop and pay securely, without worrying about having a bank account or any high-interest debt.

Similar to a debit card, you can load the prepaid credit card with your own money. This preloaded amount of money acts as your maximum spending limit. Since the spending limit is not borrowed on credit, you don’t incur any debt. So, there is no need to pay interest or worry about clearing an outstanding bill on time. Simply put, you can only spend the money you already have on your prepaid card.

Remember, using prepaid cards will not boost your credit score. Instead, they are handy when you need to make online purchases or pay your bills.

Here are a few advantages you get to enjoy when you have a prepaid credit card: 

• Eliminates the need to carry excess cash 

• Can be used to make instant  ATM cash withdrawals

• Convenience of online shopping without linking to your bank account

• No need to stress about interest accruals and credit card bills 

• Easy-to-meet eligibility criteria 

• Simplified prepaid credit card application process

• An ideal gift that you can give your friends and family

Here are the different types of prepaid credit cards: 

• Open-looped Cards

These prepaid virtual credit cards, also known as open-system cards, are branded with the network they are affiliated with. Some of these networks include Visa, MasterCard, or Amex. The respective card will carry the logo of the affiliate brand, and is usually accepted across all merchant stores.

• Closed-loop Cards

Closed-loop credit cards are accepted at affiliated merchant outlets only. This means that you can buy goods and opt for services only at that merchant’s outlets with this credit card type. 

• Semi-open Looped Cards

These are hybrid prepaid cards with features of both open- and closed-loop card types. A semi-open looped card is accepted at various chains or merchant outlets affiliated with the card’s issuer.

• Reloadable cards

With reloadable prepaid cards, you can reload funds once the original fund limit is exhausted.

• Non-reloadable cards

With non-reloadable cards, you cannot reload funds once the original fund limit is exhausted. Generally, gift cards fall under the non-reloadable prepaid card category.

Here are some of the most popular prepaid cards from leading card issuers:

The difference between prepaid credit cards and credit cards is the spending limit. But, you may find these to be similar to debit cards. 

While there are some similarities, here’s a look at the key differences between a prepaid card and a debit card: