Prepaid Credit Cards for the Online Shopper

A Credit Article Contributed by Kris Griebe

What is a Prepaid Credit Card?

Prepaid credit cards act just like normal credit cards. The difference is, instead of having a credit limit that you borrow money from to pay for your purchases, you must first "load" a prepaid credit card with money. When you obtain a prepaid card, you will first have to fill out a short application. Don't worry, there aren't any credit checks, so your bad credit won't prevent you from getting your card. Once you have filled out your application, you will be given the card and information telling you how to deposit money into your account.

The way this works is simple. You put money on your card much like you would a prepaid phone card. There is usually a small fee to "load" your card, but when compared to the interest you will save, it is well worth it. However much cash you put on your card is your credit limit. If you deposit $200.00 into your prepaid credit card account, you will be able to spend $200.00.

Can I Use a Prepaid Credit Card for Online Shopping?

Prepaid credit cards work virtually the same as a regular credit card. They have an account number that you can enter in when you attempt to purchase something online, and they have a symbol (such as Visa and MasterCard) just like a regular credit card. Not all merchants will accept this kind of card, but the majority will. This is a safe and simple way to be able to purchase things online without having all the worry that a regular credit card will give you.

What are the Advantages to Using a Prepaid Credit Card for Online Shopping?

Well, the advantages come down to the differences between the two types of cards. First of all, because you are not borrowing money from the credit card company, you will pay no interest. If you use your card frequently, this can save you a load of money. Also, you cannot go over your balance, so you never have to worry about amassing debt.

You won't have to go through a credit check to get a prepaid credit card, which means that if you have poor credit, you can still obtain a credit card for your online shopping, or any other use you wish to use it for!

Be aware, there are disadvantages as well.

The major disadvantage is that you have to put money on your card up front before you can use it to purchase anything. So if you want that shiny new television you saw on that website, you will have to have the money for it first.

Another of the primary disadvantages is that you will pay small fees every time you wish to put more money into your account. This is typically little more than $5.00, but if you deposit a large amount, it is possible the fee could increase up to $50.00! In the long run, you will still probably save more because you pay no interest, but this is a fee you should keep in mind.

Carefully consider the advantages and disadvantages and you will be able to decide if a prepaid credit card will help you obtain the online purchasing power you seek!