| Observers in the lending industry have | | | | Prepaid credit cards for travel are accepted |
| estimated that there may be at least 50 | | | | all over the world, and also allow you to |
| million Americans who are not able to qualify | | | | obtain currency from ATM machines. When you |
| for credit. These consumers are usually | | | | need to reload and you are already traveling |
| young, often members of the minority groups | | | | you can arrange for the reload by phone or |
| and unbanked...and they are faced with the | | | | online. Apart from the fact that it is a |
| long-standing dilemma of credit: how can I | | | | prepaid credit card, you can use it exactly |
| build my credit record if no one will give me | | | | like a regular credit card. That also means |
| any credit at all? | | | | you enjoy other benefits just like a regular |
| | | | card - reimbursements for lost luggage of up |
| One of the answers offered by credit card | | | | to $1,000 per cardholder if your luggage is |
| companies is a variety of prepaid credit | | | | lost; zero liability if your prepaid credit |
| cards, designed for use by specific segments | | | | card is used fraudulently after you lose it |
| in the market. The prepaid credit cards are | | | | or have it stolen from you; purchase security |
| meant for that significant portion of the | | | | up to $500 per claim for any items you buy |
| population that cannot meet the qualification | | | | with prepaid credit cards, which subsequently |
| criteria for regular credit cards, or who | | | | gets stolen or damaged for certain reasons. |
| qualified before but have since lost their | | | | |
| credit due to repeated defaults and other | | | | Generally, you can purchase prepaid credit |
| reasons. | | | | cards of all the major credit card brands at |
| | | | their participating retailers. You don't have |
| Advantages of Prepaid Credit Cards For those | | | | to worry about not having acceptable credit |
| who do not have enough credit history or have | | | | because prepaid credit cards are made |
| had it blemished, prepaid credit cards are an | | | | available without need of a credit report or |
| effective way to build or slowly rebuild | | | | a bank account. The only qualifications you |
| credit. That may not happen immediately, but | | | | need to have are that you have reached 18 |
| it is something to work on over time. The | | | | years of age and that you must be able to |
| banks that issue prepaid credit cards are | | | | present a valid identification issued by |
| also prepared to extend normal credit the | | | | government. |
| moment you are able to show that you have | | | | |
| become a worthy credit risk. | | | | Disadvantages of Prepaid Credit Cards |
| | | | |
| For the moment, you may have to make do with | | | | There are a few things about prepaid credit |
| prepaid credit cards. You can use prepaid | | | | cards that may not be as convenient as the |
| credit cards as you would any other regular | | | | regular credit cards. For one thing, you load |
| credit card to purchase airline tickets, | | | | only so much money onto it. You will need to |
| reserve hotel rooms, or order items online. | | | | keep track of the balance on the prepaid |
| | | | credit card because not all of the merchant |
| Prepaid Credit Card for Students | | | | terminals where you use the card may be able |
| | | | to help you determine it. However, there are |
| There is a special prepaid Visa credit card | | | | procedures that tell you how to determine |
| for students, which offers a lot of | | | | your balance, and you will these detailed on |
| convenience not only for the students but | | | | the back of the prepaid credit card and in |
| also for their parents. These reloadable | | | | the instructions accompanying it. |
| prepaid credit cards offer parents several | | | | |
| options on how to reload. Parents can add | | | | The process of reloading your prepaid credit |
| money to reloadable prepaid credit cards by | | | | card may be a little inconvenient to some. If |
| depositing money, by arranging an automatic | | | | you're using cash, you would have to visit |
| transfer of funds from their account (a | | | | the participating outlet where you bought |
| deposit account or their own credit card | | | | your reloadable prepaid credit cards. The |
| account), or by online transfer. Using the | | | | more convenient way will be reloading online. |
| prepaid Visa credit card is no different from | | | | |
| giving the regular allowance to their child, | | | | There are also the charges. Prepaid credit |
| only they do so by electronic means and there | | | | cards impose an application fee, the amount |
| is no more cash that changes hands. | | | | of which varies with the issuer, and there is |
| | | | also a service charge that you have to pay |
| The big advantage of the prepaid Visa credit | | | | monthly. You also have to pay for transaction |
| card is that the student is limited to spend | | | | fees, charges when you transfer funds to top |
| only as much money as there is in the card. | | | | up the balance, when you replace your prepaid |
| The parent is thus able to control to some | | | | credit card, and many other fees. To be sure |
| extent the spending behavior of their child. | | | | about the fees, you should read closely the |
| They can use the prepaid credit card anywhere | | | | fine print on the prepaid credit card |
| that the credit card brand is accepted. | | | | account. |
| | | | |
| Prepaid Credit Cards as Gift Certificates | | | | Prospects of Prepaid Credit Cards |
| | | | |
| Some prepaid credit cards function like gift | | | | Prepaid credit cards do not provide credit; |
| certificates. You buy the prepaid credit card | | | | it is your money that you're using. You are |
| for a certain amount, and your recipient can | | | | asked to pay other charges, so it is not for |
| purchase items with it at any of the | | | | free. You are paying for the convenience and |
| brick-and-mortar stores or online merchants, | | | | security of carrying plastic instead of large |
| and also for mail order items, that accept | | | | amounts of cash. People with bad credit will |
| the particular credit card brand. Your | | | | be able to act as if they had a regular |
| recipient can use the prepaid credit card | | | | credit card and enjoy the convenience of one. |
| only up to the amount of money that you | | | | |
| loaded on it. This particular version of | | | | Issuers of prepaid credit cards realize that |
| prepaid credit cards is non-reloadable. | | | | it is a good way to monitor the credit |
| | | | behavior of the cardholder. A prepaid credit |
| Like any gift certificate, recipients of | | | | card would be a source of information that |
| prepaid credit cards can buy whatever it is | | | | indicates to the credit bureaus and issuing |
| they want at any time they want. Unlike a | | | | lenders about how you as the individual |
| gift certificate that, when it gets lost is | | | | card-holder use the card to pay your bills |
| lost forever to the recipient, prepaid credit | | | | such as utilities. If these consumer data |
| cards may be replaced if it gets lost or is | | | | could be formatted in such a way as to |
| stolen. | | | | provide the basis for a statistical model on |
| | | | probable future behavior in spending, then |
| Prepaid Credit Cards for Travel There is a | | | | this could become the foundation for building |
| prepaid credit card designed for travel. | | | | a credit history. |
| These reloadable prepaid credit cards can be | | | | |
| purchased in lieu of travelers' checks or | | | | You would benefit, because by using prepaid |
| cash. In a way, it combines the best features | | | | credit cards you are rebuilding your credit. |
| of a credit card and a traveler's check | | | | The prepaid credit card issuers would |
| because of its convenience and security | | | | benefit, too, because they would be making |
| features. Should you lose the prepaid credit | | | | previously unproven customers bankable. More |
| card while you are on travel, you can easily | | | | people could then qualify for regular credit, |
| obtain an emergency replacement, both for the | | | | and that would mean tremendous incremental |
| prepaid credit card and some cash. | | | | revenue for the lenders. |
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