Prepaid Cards and Bad Credit Credit Cards

Prepaid Cards - Plastic Cash

Prepaid Cards get a lot of people scratching their heads - what are they exactly and what are they for? More importantly, who are they for? Do I need one?

A Prepaid Card looks and feels like a regular credit or debit card. It is the same size and shape, it has a magnetic strip, Chip and PIN and your name on the front. It even has a long card number. But that is where the similarity ends - for the prepaid card is simply a card onto which you can load funds.

Use the card to pay for goods on the internet, in shops and restaurants, and once the funds have run out, you need to top up the card again. You are not able to borrow funds or access a line of credit.

So what is the Point?

Ok, so now we know what the Prepaid Card is, but what’s it all for? Well, if you’re anything like the regular UK consumer, you may find it hard to keep on top of your borrowing habits or credit card use. Many people find it hard, and get themselves into quite a bit of stress by being stuck in overdrafts or unpaid credit card bills. A prepaid card means you will not have this problem. What you load on to the card is what you spend - nothing more, nothing less. So then you may ask, well why not just use cash? Cash cannot be used to pay for items on the internet or via catalogues, for example. A prepaid card means you are able to do this. Also, most prepaid cards are offered in conjunction with a second card. That card can be given to family or friends, who will then also be able to access the money - a really easy and quick way to share money, even if you are in different countries.

What’s the Hitch?

As with any financial product, there is a slight drawback. Prepaid cards are really useful, but most issuers will add small fees on to the card - so for example, there may be the Monthly Management Fee, which will be deducted from your funds. All cards will have transaction fees, which you will be subject to on regular credit cards too. Prepaid card users need to make sure there are enough funds on the card to cover these added fees. Compare issuers to see who has the best deals and least fees as these vary.

Poor Credit Credit Cards

This type of money card is exactly what it says - a credit card for people with bad credit.
As with a regular credit card, this card has most of the same features and will be issued by one of the main providers such as Visa or MasterCard.

But while many credit cards are exclusively for people who have a healthy credit rating, poor credit credit cards will be easier to gain acceptance for.  So, you may have been refused a credit card application with your regular bank - try applying for this kind of card and you are more likely to get a “yes”.

But hang on a second - surely getting a credit card when you have an unhealthy credit history could make matters worse?  Well, that is a risk - and because you are a risk, the APR rate on this type of card can be much higher than norma.  Some cards even carry a rate as high as over 100%.  That means, you will need to be very vigilant in paying in time, or you could end up in a very awkward financial situation!

It would probably be wise to make sure you are prepared to take on the responsibility of a credit card if you have had problems in the past.  Weigh up your options and see if there is an alternative way to access cash.  If in any real doubt, seek independent financial advice to get a good idea of what is best for your situation.

The other option is to apply for a loan, and there are companies that specialise in getting loans for people with bad credit - so if it’s a lump sum you need, you can approach one of these lenders.

Looking for a loan but have adverse or negative credit? There are companies that specialise in Loans for people with bad credit. Have a look online - always your best bet!