Limit your spending to a budget
One way to keep a tight leash on your expenses is to use a pre-paid credit card. Load money onto the card before you spend, and you'll receive the benefits and convenience of a credit card, but with the peace of mind that you are spending money that you actually have.
Who can benefit from using a pre-paid credit card?
- Young people who want the convenience of card payments, but who need to remain within a budget.
- Anyone who wishes to budget using the money they already have.
- Anyone who has been refused credit, but still needs the convenience of a credit card.
How can you use a pre-paid credit card?
Pre-paid cards can be used in shops and for services in the same way that normal credit cards are used. You will recieve a PIN that is unique to your card. You input this number at the checkout desk as normal, and the total amount of your purchases will be taken off of the card straight away.
When shopping online, you fill in the details of your card as usual, and as long as there is enough money on your card, the transaction will be completed.
Some fees are associated with the card, such as:
- A fee of £5-£10 to purchase the card.
- Some cards have annual or monthly charges.
- Some cards apply a charge when you load the card. Be sure to check the contractual small print as there is quite often at least one free option to this.
- There are charges applied to overseas transactions which you make, as well as a charge for cash withdrawals made from an ATM. A few cards will also charge fir UK transactions, so be sure to look around for one that doesn’t!
The benefits to the user are:
- There are no credit checks, which means you gain access to a card without worrying about what lies in your credit history. However, card providers will check that you are who you say you are by requiring a form of identification.
- There is no danger of getting into debt, as you can only spend what is actually loaded onto the card.
- You will not be charged interest.
- There are no late payment fees, as you pay up front before using the card.
- You have the same convenience of shopping in store or online as with a credit card.
Another benefit worth stating is that other people are also able to load money onto prepaid cards. For this reason, prepaid cards are popular with parents wishing to help their children whilst keeping them to a budget. Its also possible to have your salary loaded onto a card.
Some cards allow you to specify a secondary cardholder, but this is subject to a fee, and the primary cardholder remains responsible for the account.
Card fraud
As with any type of card, if your card is lost or stolen, then it is essential that you inform your card provider immediately, as they will block your card from further usage. Prepaid cards can’t be used without a PIN.
About the Author: Marcus works on http://www.cardsmart.co.uk/. CardSmart has put together a great list allowing you to compare Prepaid Credit Cards, so if you're in the market for a new card, why not head over to http://www.cardsmart.co.uk/prepaid-credit-cards/ and find yourself a great new prepaid card?
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