Prepaid Credit Cards are issued by banks and financial institutions and function in a way similar to regular credit and debit cards. They come loaded with funds, which is the maximum spending limit and cannot be exceeded.
The company might charge a small issuance fee for the cards, but generally not many formalities are involved in getting a prepaid credit card. The Credit Score which is an important factor for most financial transactions is also not very significant for a prepaid credit card, as the holder uses own funds which have been loaded onto the card.
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Carrying hard cash around is not practical and if the cash is stolen, it is lost forever. For convenience, credit cards and debit cards are used. Credit cards have a line of credit which is extended by the financial institution and interest is charged on outstanding dues.
Debit cards are linked to the holder’s bank account and use funds from there, but offer an overdraft facility. These two cards tempt the user to spend heavily. Prepaid credit cards neither have a credit line nor are linked to any account, and hence they cannot be used once the loaded balance is exhausted. People cannot be tempted to use more than what they have and land themselves in debt and pay interest and thus, they are a more economical choice for users.
Prepaid Credit Cards are issued by a financial institution and branded by major credit card companies like Visa and MasterCard. Money is loaded in the card and can be used as long as there is balance in the card. These cards are accepted at most places where regular credit cards are used. They can be used for making purchases at physical stores or even online.
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