External business consultant Jennifer Brown, writes in her column in the online journal Credit Now, the advantages and disadvantages of prepaid credit cards. This is in response to concerns bymany consumersbecoming increasingly worried with issues in the credit card industry.
She starts off by saying that prepaid credit cards are the easil available option for those who do not maintain any credit cards or those who have not opened any bank or chequing account in the past.
Prepaid credit cards offer more advantages for some individuals due to their simple requirements as a debit card. The prepaid credit card neither needs a bank account nor a proof of one’s capacity for good credit maintenance.
Most importantly, Brown capitalizes on the fact that prepaid credit cards has no credit check in place as seen in the absence of the minimum balance requirement.
Individuals opt for these credit cards, Brown says, to be able to more fully monitor their spending. Also, the prepaid credit cards can help holders to get rid of unnecessary costs or expenses since they are using their own budget, which may be limited for some.
On the other hand, Brown also has some disadvantages of prepaid credit cards to introduce. Among which are different fees that can be charged, hidden costs that can mean more payments to be made that expected, etc.
The costs include activation fees, ATM cash withdrawal transaction charges, monthly fees, fees for non-usage of the prepaid credit card for a period of time, and service fees on calls made to customer service. Holders are also advised to watch out for probable charges on PIN usage and changes and cash back at the counter.
Brown finally adds that prepaid credit cards, like a debit card, also have no protection under the federal laws. With these, she advises individuals who wish to build good credit histories with banks for mortgage and car loans in the future to choose credit cards instead if they can afford. The prepaid credit cards, she adds are not linked to banks for future transactions.
Brown then says that individuals should find it best for them to consider and compare their options first because the prepaid credit card, as well as any other card for that matter, has its disadvantages in the same way that it has positive things going for it.
