A prepaid credit card or a prepaid virtual credit card is issued by a financial institution or bank to be used for transactions in a very similar way to a credit card. A prepaid card comes loaded with funds and works in a way that is very similar to a normal credit card. However, unlike a normal credit card that will function on credit that is borrowed from a bank, a prepaid card allows customers to make purchases using funds pre-loaded into the card.
Akin to a gift card, a prepaid cc can be used until it has funds. The greatest advantage offered by a prepaid card is that customers can make purchases without incurring any debts while also paying huge interest. Additionally, there is also a credit limit with such cards that have to be adhered to, and purchases have to be made only up until the amount that is available on the card. A nominal issuance fee may be applied by banks when a prepaid card is offered. The credit score of an individual is also not a key criterion once approvals are carried out. Along the same lines, using a prepaid card for one’s purchases does not significantly impact the CIBIL score of an individual. So, if you dont have a Prepaid Card yet, then apply for a credit card today!
Here are some of the benefits of using a prepaid credit card over a normal one.
Currently, there are a variety of prepaid credit cards — both real and virtual available. One’s preference and needs will determine which type of prepaid cc is ideal for them.
Here is a comparison of a debit card versus a prepaid credit card. Although they function similarly to one another, there are some subtle differences between the two. A prepaid credit card, similar to a debit card, is linked to a bank account. A prepaid credit card places a limit on the amount that you have already loaded into it. Alternatively, a debit card allows you to spend the sum that you have within your bank account.
A prepaid card can be linked to a certain business brand. Alternatively, a debit card can be used in any store or place of business that accepts MasterCard or Visa. When it comes to the spending amount on your card, with a preloaded credit card, you can simply reload it with a cheque or through cash. On the other hand, a debit card can be used for as long as you have a bank account associated with it.
Whether you buy a prepaid credit card online or you opt for one through your bank in person, there are certain drawbacks to this type of payment mode. Some of the drawbacks of using a prepaid credit card are as follows:
In conclusion, prepaid cards are an effective way to limit one’s spending especially if you are a new salary earner. As with any payment mode, they come with their own set of drawbacks but can be the right fit for you if you are looking to make electronic purchases in a budgeted way.