In reality, prepaid credit cards cannot justify the concept of credit cards completely. The customer has to pay the amount for which purchases are made beforehand, which means that they are not provided with any credit by the issuer. The only reason why they are included as a type of credit cards is because of the way in which they are used. Prepaid credit cards are also accepted and used in the same way as other credit cards.
The advantage behind using prepaid cards is that they do not include financial charges. Although, other charges such as application fees, monthly or yearly charges, over-limit fees and reload fees can be implied by the credit card issuers. With the help of prepaid credit cards, debts on credit cards are avoided because all the bills are paid in advance. Also, it helps to transfer only the amount of money that the customer wants to spend using the card which eliminates any risk of an outstanding payment on the card. Another advantage of prepaid credit cards is the simplicity that it brings in the monthly budgets. When a fixed amount is available for the monthly expenses, it is assured that the budget wouldn’t exceed the limit and then create debts that are not required.
Prepaid credit cards are best suited for people having a bad or poor credit record. By using these credit cards, customers can avoid unnecessary debts and as a result a further loss of credit rating. Also, due to the prepaid system of bill payment, there is no pressure on the customers to pay off the dues at the end of each grace period. If used wisely, prepaid credit cards can indeed be very useful and would also help in improving the credit rating over time.