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Prepaid cards represent an alternative for individuals who cannot or choose not to obtain a conventional credit card or a charge card. Just as with a debit card issued by a bank, the “credit” limit for a prepaid card is limited to the amount in funds that you have loaded onto the card. As a result, there is no possibility that you will incur finance charges on purchases that you have made with a prepaid card. On the other hand, prepaid cards carry a number of significant limitations.

Credit-Building Versus Standard Prepaid Cards

A significant limitation of many prepaid cards is the fact that they do not report the transactions of card holders to the three major credit reporting agencies in the United Kingdom: CallCredit, Experian and Equifax. However, a special category of prepaid cards do report user transactions to credit reporting agencies. Wise use of credit-building prepaid cards can help you establish or rebuild your credit.

Advantages of Prepaid Cards

Prepaid cards require no credit check. Minors are freely allowed to obtain prepaid cars. This is because prepaid cards limit your spending ability to the amount of funds loaded onto the card. Unlike a charge card or a credit card, you cannot go over your credit limit with a prepaid card. In other words, there are no credit-granting decisions associated with a prepaid card because no credit is being granted. In addition, many prepaid cards offer a direct deposit option that allows you to access funds deposited to the prepaid account earlier than would be able to access your funds by cashing a paper check.

On the other hand, you can shop with a prepaid card online and use your prepaid card to reserve and pay for plane tickets and hotel rooms. Prepaid cards also represent a safer way to carry liquid funds than carrying large amounts of cash. If you lose your prepaid card, or if it is stolen, you can receive a replacement within days, with little risk of losing your funds, even if your card is fraudulently used. In addition, prepaid cards are accepted in nearly every venue that accepts conventional charge cards and credit cards.

Disadvantages of Prepaid Cards

In many respects, prepaid cards are similar to charge cards, but with few of the associated prestige or advantages. You do not obtain access to exclusive airline lounges by flashing a prepaid card. Many prepaid cards do not offer rewards or points programs. On the other hand, prepaid cards carry significant fees, including annual fees, monthly fees and fees for ATM transactions. When combined, these fees can add up to be significant.

Except for their acceptance by merchants that also accept credit cards and charge cards, prepaid cards offer few of the advantages of a conventional credit card or a charge card. You do not receive an interest free loan with a prepaid card, and you cannot make payments over time. There are no balance transfer opportunities with prepaid cards. Except for credit-building prepaid cards, prepaid card activity is not reported to credit reporting agencies. This means that if you are attempting to rebuild or establish credit, using a prepaid card will have no beneficial effect at all.

Prepaid Cards Versus Debit Cards

For parents of young children, prepaid cards represent a safe alternative to cash. Kids can use prepaid cards to purchase nearly everything that they want, including snacks, ringtone downloads or online game credits. The vast majority of prepaid cards also allow cardholders to make withdrawals at ATMs when cash is needed. For nearly everyone else, however, including older teenagers, debit cards issued by banks represent a more desirable alternative to prepaid cards.

Unlike prepaid cards, bank debit cards frequently carry few or no fees, which makes them much less expensive than prepaid cards. Bank debit cards also carry logos that allow cardholders to use them for online purchases, for restaurant meals, for retail transactions and to reserve and pay for travel accommodations. Band debit card holders are also frequently able to take advantage of direct deposit schemes

Choosing a Prepaid Card

If you decide to obtain a prepaid card, it pays to shop around. Look for cards with the lowest direct fees such as monthly fees. You should also seek out cards with low or no transaction fees, as well as cards with low ATM fees. And if you are seeking to build or rebuild your credit, insist on a credit-building prepaid card.

What’s better than getting something back on your credit card offers? Getting a chance to help save the environment while you’re at it, too. Consumers worried about their carbon footprints can find reward cards that help them either reduce the cost of their energy demands or provide incentives for eco-friendly products and services. If you really want to give back to your community, you can also donate your rewards to green charities that will put your money to good use. Check out how you can use a rewards card to create the values in your community that will guarantee that everyone gets a green deal.

Rewards that cut your electricity and gas costs
Some reward credit cards offer cash back incentives that can be applied directly to your electricity or gas supplier, as long as they are partners with the card. This does not reduce your carbon footprint, but it reduces the strain on your wallet during the worst of the winter months. If you want to really reduce usage with a rewards credit card, then you can opt to get a car that gives you air miles and fly away for the worst of the season to a warmer climate. That strategy will definitely work to lower your consumption.

Shopping rewards for green products and services
Whether you use points or shopping rewards to get vouchers for products and services, you can opt to use them only on green products. If you get a card that already has some affiliation with a green ethos, you can be sure they will be sending you offers for their products and services more than conventional ones. You can even double those green points by upgrading your appliances to more energy-efficient models using a rewards credit card. Then, if you are offered a voucher or points for products and services, redeem it for more eco-friendly items.

Other ways to get green with your rewards card
Cards that are affiliated with non-profits or environmental groups often fund these groups as well. These are called affinity cards and are usually branded with the organisation’s logo. By using a card issued by that organisation, some of the fees return to it and can be used to help support its functions. Donations to the organisations are also facilitated by the use of credit cards as they are the easiest way to donate online. In fact, the use of credit cards, whether rewards or standard issue cards, has been one of the major reasons more charitable organisations have been able to increase their donation levels. If you get a card associated with a green mission, then you will be helping them in more than one way. Some cards in different nations already allow you to send your rewards directly to an organisation of your choice. However, even with cash back, you can decide to use those monies to help support your favourite green company or charity.

Small strategies to keep the carbon footprint low
Instead of opting for paper statements from your credit cards, you can go paperless and save some trees. It’s not always about the rewards. It’s also about how you use them. Recycle old cards instead of throwing them out and putting them in a landfill. Just remember to cut them up before they’re used in artwork or children’s projects. Use the rewards cards to patronize environmentally-friendly businesses or those that are aligned with those values to make sure they get to remain market forces. If you can’t find a rewards credit card that offers some green deals as part of their package, you can always opt for a standard card that is issued from a bank or lender that has promoted environmentally-friendly agendas to show your support. While other countries may be ahead of the game on the types of promotions available with green reward credit cards, there are many ways to give to the causes that interest you without a particular affinity card or rewards program associated with green ideals. It’s really up to you. You can make any card you own a green card because eventually by spending where these values are important, you show your loyalty and help these places to survive and thrive in the conventional economy.