Advantages of Using a Prepaid Credit Card

prepaid credit card

When it comes to using credit cards everyone has different opinions about them.

Some people say that they use their credit card to pay for everything they buy, including a pack of gum.

Some say they only use their credit card for large purchases such as booking travel or renting a car.

Others say they prefer to carry cash and they either leave their credit cards at home, or they do not even have a credit card.

And then there is another group of people, and that is the group that have a poor credit rating or have declared bankruptcy, and they do not qualify for a credit card.

Those that do not qualify for a credit card, have a few options when it comes to purchases.

They too can use cash, or they can use a debit card.

But what if they want to book a hotel or rent a car? Will the hotel let them use their debit card over the phone to reserve a room?

Not usually.

So now what?

The answer is for them to get a prepaid credit card which they can use exactly like any other credit card. And you may not be aware of this but there are many advantages to using a prepaid credit card, especially ones that are issued by  

The Advantages of Using a Prepaid Credit Card

  • You do not need to complete a credit application.
  • You can earn cashback rewards on your everyday purchases, both in store and online.
  • You can use it to book a hotel or rent a car.
  • You can use it to shop online.
  • If you carry cash and lose it, especially when traveling, it is gone forever. If you carry a prepaid credit card and lose it, you call and cancel it. A new one will be sent to you.
  • With a prepaid credit card you load as much cash as you wish to spend and you can top this up at any time online or via telephone.
  • A prepaid credit card also provides you with the same security as a traditional credit card as it uses the Chip and Pin system.
  • You are not spending more than what you can afford at any given time.
  • Get discounts on insurance, gas and electricity, broadband, travel, and optical and dental care.

Have you ever needed to use a prepaid credit card? Would you use one if you didn’t qualify for a traditional one? 


    • CanadianBudgetBinder

      CanadianBudgetBinder 09/22/2012 4:35 p.m. #

      I think the pre-paid credit card is great for those that don't own a credit card for whatever reason. The only downside is that some of them charge an activation fee and that can run you about $5.95 or more. If you don't need it, I wouldn't bother but for those times like staying at a hotel they are great. Cheers Mr.CBB

    • Tackling Our Debt

      Tackling Our Debt 09/22/2012 5:12 p.m. #

      @MrCBB - It is unfortunate that some things, like booking a hotel, can only be done with a credit card, but it is a fact of life, hence why more organizations are offering these I guess.

    • Kim@Eyesonthedollar

      Kim@Eyesonthedollar 09/23/2012 9:07 p.m. #

      Well, one benefit of running up huge credit card debt is that I have a great credit score from all the credit history. Not a reason to get into credit card debt though. Pre-paid might be the only way some people can rent a car or buy an airline ticket. My dad has always just paid for everything in cash, but needed to rent a U-haul once, and they wouldn't let him without a credit card, even though he had cash to pay for it. I guess you have to have one for those situations.

    • Tackling Our Debt

      Tackling Our Debt 09/24/2012 9:14 a.m. #

      @Kim Yes standard credit cards do improve your credit rating, which a prepaid card will not do. My Dad was a cash only person as well and only started using his card about 10 years ago to accumulate air miles.

    • mrsplungedindebt

      mrsplungedindebt 09/25/2012 10 a.m. #

      Given that we're on a DMP and shouldn't be using any credit until our debts are paid I think we'll be getting a prepaid card for our family reunion trip next year. I think they definitely have their place and a great alternative if you don't have access to 'regular' credit cards. They also help by teaching you to not spend more than you have. Good learning tool for some.

    • Tackling Our Debt

      Tackling Our Debt 09/25/2012 3:08 p.m. #

      @mrsplungedindebt - I think that is a great idea. Yes, it will help you budget but also give you the flexibility of a standard card. I was thinking of getting one just for around town in case I ever had an emergency and was only able to use a credit card too.

Comments are closed.