In a world dominated by plastic it is very difficult to survive without the availability of credit or debit card. Even where cheques are still accepted they are of no use without the security offered by cheque guarantee cards.
There are some who shy away from the word credit and others who are unable to obtain credit to begin with due to age, a poor history of money management or, in a few cases, the address where they happen to live.
It is for these two groups that pay-as-you-go prepaid credit cards are designed. In reality there is no “credit” in terms of borrowing money available on these cards. They are cards which are preloaded but offer the user the same methods of payment enjoyed by traditional credit or debit card holders.
This has huge advantages, especially to those of poor credit rating, of being able to pay for purchases or services where it is impossible to use cash such as online or over the telephone. It is also a great way to pay for such things as hotel rooms where paying in cash would require additional proof of identification.
It also increases security in reducing the amount of cash having to be carried around daily on one’s person. When you consider the price of petrol and the weekly food shopping bill a prepaid credit card can substantially reduce the strain of carrying large amounts of cash.
There are also longer term benefits for those who have a poor credit rating; if they are shown to be used sensibly over a period of time it is quite often the case that traditional credit and debit cards are offered. As prepaid credit cards will not let you spend more than has been preloaded it is impossible to get into debt and is a great way for younger or less financially aware individuals to learn the management of finances.
In short, by offering all of the facilities open to credit and debit cardholders, it allows those who might otherwise “stand out from the crowd” to operate financially in the same manner as their peers even though they may be inexperienced or had problems in the past managing debt.