Pros and Cons of a Prepaid Credit Card

Using a prepaid credit card can provide you with a number of benefits. However, there are a few drawbacks associated with this type of card as well. Here are some of the pros and cons of a prepaid credit card. 


Using a prepaid credit card will provide you with the ability to make purchases anywhere that credit cards are accepted. Sometimes, it is just not practical or possible to use only cash. For example, if you need to make a purchase online, you will most likely need to use a credit card. By utilizing a prepaid credit card, this is going to open up more opportunities to make purchases.

Prepaid credit cards are also going to be safer than carrying cash. If you lose a prepaid credit card or have it stolen, there is a good chance that you will be able to have it replaced. You can call the credit card provider and let them know that your card is gone. If you have the credit card number or you can prove that you are the owner of the card in some other way, you will be able to get it back. If you are carrying cash, there will most likely be no way to have it replaced if it is lost or stolen. 

In some cases, you can also help rebuild your credit with a prepaid credit card. Some credit card issuers will issue a small amount of credit as part of the credit card program. As long as you make your payments on time with this program, they will report this to the credit bureaus. 


Although there are some advantages to a prepaid credit card, there are a few drawbacks to know about as well. One drawback is that it is fairly inconvenient. Before you are able to make any purchases with your credit card, you have to send money into the credit card company. This means that you might have to wait for a while in order for the company to receive your payment and post it to your account. 

Another disadvantage of using a prepaid credit card is that it cuts down on your cash flow. You have to provide the company with payment before you can buy anything. This means that you have to decide in advance how much money you plan on spending. If you do not end up making any purchases, you just have money sitting on the card not being used. 

Using a prepaid credit card can also limit your purchasing power. When you use a traditional credit card, you will typically have a larger credit limit to work with. If an opportunity comes up where you need to make a large purchase, you should easily be able to do so. With a prepaid credit card, you can not spend any more money than you already have. This makes it inconvenient and difficult to make the purchases that you need at times. 

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