What are the exact reasons to go prepaid? I’ve already laid some of them out to you at the beginning of this site. I can go into more detail here to clearly explain situations where a prepaid credit card would be of use.
I’ve already discussed the issue of convenience, but let’s discuss it a little more. Say that you have a teenaged son or daughter who is going on a somewhat long trip to another city for sports or school. Maybe a student government program, a long tournament, or some type of conference. Food and necessities cost a lot of money and you’ll probably want to give them a little extra for souvenirs. So, do you really want to have them carrying around a few hundred dollars in small bills. Just managing it would be a pain. A good idea would be to get a prepaid card and load most of their money onto it. Then they only have to carry around a little cash for the places where cards won’t work. Even if they’re only going to be gone for a few days, it can be beneficial.
Giving a prepaid credit card to your child is also a great way to educate them about managing their finances. Young adults are thrown head first into the deep end of the credit world. They are bombarded with credit card offers and specials, and far too often it ends with debt and responsibilities that stick with them long into adulthood. If you want to teach them to be responsible with a credit card, you can give them a prepaid card to help them get familiar with managing a monthly budget without mom and dad looking over their shoulder.
Let’s focus on convenience for those with bad credit who just can’t get a card. You want to buy your friend a book or a movie that they want off of Amazon. The easiest way is to just have a credit card and punch in the digits. If you can’t get one, then you’ll have to hope that your bank supports free wiring or e-checks. Then there’s the annoyance of verifying it. You’re lucky with Amazon though. Most online stores won’t support bank transfers and some are even weary of Paypal. You have to have a credit card, or you are just out of luck. Thankfully, a prepaid card counts just as much as a normal credit or debit card. Having a little prepaid card lying around can make online shopping as easy as it is supposed to be.
These same principles effectively transfer to real world shopping. You’ll either have to carry around hundreds of dollars or hope that everywhere you go will take a check. Then you get the nasty looks from impatient shoppers and the sheer pleasure of balancing the checkbook each and every month to avoid overdraft fees and bounced checks. You can avoid all of this with a prepaid card.
Let’s also take a look at the security angle. Which would you rather have stolen? $100 or your Visa card? Well, financially it might be better to have your card stolen. You can probably get the money back after a long talk with your credit manager as you sort out every little fraudulent charge that your identity thief put through. Great fun! Having a prepaid card offers a higher level of security. They don’t have access to your bank account or your line of credit. All they have is the money that is on it. It’s the same limit as stealing cash, but you can usually work to get the charges cancelled if your service is reputable. The best defense is obviously to stay vigilant against identity theft and to report a lost or stolen card quickly, but for the times when you make a little mistake, having a prepaid card offers the best chance to make sure that it doesn’t become a catastrophe.
These benefits should explain the different reasons that you’d benefit from a prepaid credit card. It may not be perfect for everyone, but there are many situations where you can greatly benefit from a prepaid card. They’re just convenient and safe methods to pay for the things you want.