Do You Know Enough about Prepaid Credit Cards? (cont.)
Contributed by Stephanie Litaker
You will just need to purchase the card, set up the account, then put some money down on the card - this will serve as the credit limit. Basically, if you put $500 on the prepaid credit card, you will have a $500 credit limit. You will never pay interest charges since you are not borrowing money to pay for your purchases. You are just using your money you're carrying on your prepaid credit card.
The down sides of prepaid credit cards
Yep, there are down sides of using prepaid credit cards as well. Even though prepaid credit cards are easy to come by and will be easy to maintain, they don't come without a price. Prepaid credit cards can be expensive - you will have to pay an initial account set up fee, that usually ranges anywhere from $5 to $50. After the account is established, you will be charged a fee every time you put more money on the card.
Most traditional credit cards available today do not charge an annual fee, and if they do, it's typically pretty small. But, think of the bright side, with a prepaid credit card you won't be paying interest on the charges incurred, so you will probably break even in the end.
Also, you have to have the cash on hand to start the card up, and you may wonder why you would get a prepaid credit card instead of using the cash you will have to use to establish the card.
