The Difference Between Prepaid Cards and Standard Credit Cards

Many people are misled that a prepaid debit card is similar to a standard credit card but there is a huge difference between the two. First let us define regular plastic.

It allows you to buy products or services by just swiping it at their terminal. However, you will have to pay them later when the billing arrives. Failure to pay their bills on time will result in an interest charge that range from 2% up to 10% in some companies. Also, if you have built up a good credit, the company may give you a very generous limit. Payment terms will range from months to years, depending on the terms and conditions of the retailer.

A prepaid debit card, on the other hand, has a stored value in it. The stored value is the money you put into the account, think of it as an ATM card but instead of withdrawing money to be able to use it, all you need to do is swipe it just like a regular one. However, do not confuse an ATM card with prepaid plastic. An ATM card is primarily used for withdrawing money from a teller machine while prepaid cards, although can be used to withdraw money from a teller machine with a fee, is primarily used for transactions almost similar to common plastic cards.

Prepaid cards are easy to get, the minimum age required for a person to have a teller card is 14 in some countries. Also, a prepaid charge card is the most recommended plastic for people with bad credit. This type require you to store your money which will be used when you buy or get services from retailers. Unlike a regular card, a prepaid one does not have an interest rate and a billing date. Once you buy or get a service via prepaid cards, you already are paying for a product. Think of the concept of paying via cheque. In paying with a cheque, you put the amount and then give the cheque to the retailer, cheques are considered as good as cash, and this concept is similar with prepaid plastics.

The regular plastic will allow you to purchase or get the service required with the concept of bill me later; while, the concept of a prepaid visa or mastercard is similar to that of a cheque in which you are virtually paying them with cash.

Prepaid debit cards are widely accepted, especially if it is a mastercard or a visa. They are internationally accredited by different establishments, so long as they accept plastic as payment. By getting prepaid a visa or mastercard you are ensured that wherever you go you have ready cash at your disposal. However, keep in mind that this is not a regular credit card, thus if the stored value runs out you can no longer use it to purchase things. Immediately reload it if you feel that the stored value is running low.