|
|
PRE-PAID Credit Cards: WHAT you should know |
Despite their name, pre-paid credit cards are really 'debit' cards. Just like a debit card attached to a checking or savings account, each use of your pre-paid credit card reduces your available balance. Pre-paid credit cards can function in many ways as a person’s bank. Some companies even allow direct deposit right to your card.
Since they don't require a credit check or any applicant qualification, they're a quick and easy way to have access to purchases where cash isn't practical or simply not accepted. Most issuers do not verify employment, credit, addresses or even legal residency. This also makes these types of cards very popular with undocumented workers in the United States illegally who are unable to get a traditional card or open a bank account.
For most people, the main disadvantage of a pre-paid card over a secured card is that it doesn't affect your credit history.
Be aware that using a credit card at a gas station often puts a ‘hold’ on the card for $50-$75 prior to the gas purchase. In this case, even if you only buy $10 in gas, the remaining amount may not be released for a day or two. Also, if you’re near your credit limit, and the 'hold' amount exceeds your available balance (even if your intended charge would not have), the charge will be declined.
|
|
