Prepaid Debit Card – An Option for People with Not So Good Credit

There are many people who are denied when they apply for credit cards because of their bad credit history and low credit rating. This can create many problems for the consumer because a major credit card is required to be able to make both online and telephone reservations for airline flights, hotel rooms, vacation packages and rental cars. A credit card is also a necessity to purchase goods and services over the phone or online. The good news is that there is an alternative for individuals in these situations in the form of a prepaid debit card.

A prepaid debit card account is opened at the time when a consumer deposits some money into the account. The process is comparable to how you would deposit money to open a checking or savings account. When the money is deposited in the account, you will be given a debit card that can be used for all purchases in the same way you would use a traditional debit or credit card. One of the best features of this kind of debit card is that you can only spend as much money as you have available in your account. So, you will no longer have to worry about opening up the dreaded credit card bill each month. The money is yours to spend until it is gone. The card will be inactive until you deposit additional money into your account. And, paper bills and finance charges are a thing of the past.

However, there are some not so good things to think about before you sign up for one of these cards. You will have to pay a set up fee to open the account. These set up fees typically average about $10 to open a prepaid debit card. Also, you will be charged a reloading fee each time you add more money into your prepaid debit card. However, if you are one of those individuals with poor credit or a bad credit rating, the benefits of this type card are probably worth more than the added cost and fees. This card will make it easier for you to make online reservations and purchase goods and services both online and in person without being concerned about monthly bills and finance charges.

Something else to take in consideration when deciding to apply one of these cards is that they cannot be used as an automatic bill payment system to pay for services such as Internet, cable and cell phone bills. The reasoning behind this is that companies will not accept prepaid debit cards for automatic payments because there is no guarantee that the money will be in the account each month. A prepaid debit card will eliminate the frustration of needing a credit card to survive in the world today.