Benefits of Prepaid Credit Cards

The concept of prepaid credit card, which is quite often mistaken with a common debit card, has been around for quite some time. The two concepts have some common features and definitions, but the real fact is that the prepaid credit cards have some great features which debit cards don't have. A genuine problem or let's say an ironical fact that is present in the name of the card itself is that it is a 'prepaid credit card'. A credit card, as the name suggests, is a card or rather an instrument which tends to extend credit to the user. The credit card company bears the burden of expenditures paid for through the card. At the end of the month, or after credit card's bill arrives at our door step, we owe the company the sum total of all expenses, an obnoxious APR (Annual Percentage Rate) and in some cases, a brilliant fine of late payments may also be included in the bill.

In the recent recessional crisis, there were several credit card debts incurred by normal credit card holders. Fact is as of today, the common consumers of United States are suffering from burns of the recession, with the two key problems being:

The recession has left behind bad credit reports and scores, which prevent the people from getting any common credit cards and most of the applications are rejected.
The second problem that the people tend to suffer from is actually a phobia of credit card and some of their really negative effects.

On the whole, prepaid credit cards can be viewed as a really good alternative for most of the credit related services in the American economy. The following are some of the really good benefits of these cards.

1. A Unique Mechanism
The best benefit of prepaid credit cards is their fantastic mechanism, which works in the exact opposite manner as a regular credit card. When you apply for a prepaid credit card, the company gives you an account which is very much like that of a bank account. You can feed/deposit money into this account, which is loaded or charged into this credit card. This money can be spent through the prepaid credit card. The amount pf expenditures cannot exceed the amount that has been deposited into the account. For these services the company charges a very small fee and nothing else. This kind of mechanism prevents you from overspending, you don't have to pay any huge APR's and fees and fines.

2. Reporting to Prominent Credit Reporting Agencies
Another specialty of this card is that being a credit card, which is prepaid, the credit card company reports to almost all prominent credit rating agencies. Every, load, charge, deposit and execution of a successful transaction is entered into a positive report which is handed over to the credit reporting agencies. This proves to be very beneficial as your credit rating and score keeps on going up, and all you need to do is use the card and pay the small fee which is levied by the company.

3. No Credit Check and No Hassles
Any person willing and capable of paying the small membership fee can get a prepaid credit card. The company, in fact, does not even bother to conduct the demoralizing credit check which reflects badly on the your credit report. Rather, your application is processed right away and you get your card.

4. Cash Back Benefits
Like the normal credit cards, the prepaid credit cards provide great cash back plans on specified expenditures such as gas and groceries. Another scheme is the point generation scheme, where in a certain number of points can be turned into a discount or cash. In such a manner if you plan out your finances really well, you can shop really economically and also save on a ton of money.

5. Financial Planning and Control
The best merit of prepaid credit cards is that the mechanism and the way in which they work and are used, enable us to control our expenses and at the same time, you also push up your credit reports and are not exposed to the risk of carrying about money in cash.

As a result of the aforementioned benefits, students, people looking to improve their credit reports and scores, can successfully and also effectively exploit all the merits of these credit cards. On the whole, prepaid credit cards are a great alternative to the common credit cards.