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26/05/2020 - 

Prepaid credit cards vs regular credit cards

Prepaid credit cards vs credit cards


The difference between credit cards and prepaid credit cardsCredit cards have been around for a long time. And they’re so widely used that even if you’re not a fan, you’ve probably just accepted them as a fact of life. Sure, they bring a lot of advantages and can be a great choice for certain situations. However, they’re not always the best, the cheapest or the safest way to make payments. There are more and more alternatives out there, including prepaid credit cards. If you’re interested in making safe, fast and responsible buying choices, you owe it to yourself to learn more about the alternatives.

Here, we’ll go through all the popular reasons to use a credit card, and review whether prepaid credit cards could be a good (or better) alternative. Will you come out of this article with a changed way to buy online? You might be surprised.

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Credit cards: not much has changed



If you were to need something you couldn’t pay for in the 19th century, you’d likely be able to convince your local merchant to give it to you now and receive payment later. And along with the goods, you’d be leaving the shop with a small punched copper coin to put on your keyring as a reminder of your debt. That’s one coin for getting bread or a hammer. Just imagine the size of the keyring you’d need to carry with you if everything you purchase with a credit card today came with a token.

Even though carrying the weight of our debts has become less literal since the invention of credit cards, it has by no means become any less real. And as much as it’s tempting to spend money you don’t have, it’s a vicious circle many fail to ever get out of.

So, isn’t there another way?

Prepaid credit cards: flexibility and freedom



Credit cards are essentially a loan. And as convenient as loans are when you’re in need of money, they are not exactly the definition of flexibility. So, unless you really cannot avoid buying on credit, you should be aware of the alternative: using a prepaid credit card.

If you’re new to the concept, have a look at this comprehensive review of what prepaid credit cards are. The essence is this: you can only use money that’s on your prepaid card. You can either preload the money on a physical card or use your money to buy a code that represents the amount. This code is handy to use directly as a payment method on thousands of websites. Whichever type of prepaid credit card you select, there’s no debt involved.

How is that different from a debit card, you wonder? Prepaid credit cards have several advantages over debit cards and are much better suited for specific situations (e.g. online gaming or luck-based entertainment) than any other payment method.

Let’s go through all the traditional features of credit cards and see how their prepaid cousin compares.

Credit cards vs prepaid credit cards



We may joke about credit cards, but they’re still around because they clearly offer some attractive features. The question is whether a credit card is the only payment solution that offers these. Let’s see.

You can pay with money you don’t have right now



Essentially, a credit card is an on-demand line of credit. As long as you have one, you don’t have to wait until you get a salary (or even a job) before you buy something. Or, if you find yourself in a financial emergency, you don’t have to put a financial strain on your friends or family, as long as your credit card limit is enough to cover your urgent needs.

What’s the downside? If you can repay your credit card charge within the month, no interest is due and everyone is happy. However, if that’s not the case and you carry over your credit card payments like a key ring from one month to the next, then you’ll end up paying a lot more than you intended to. And from spending money you don’t have you’ll smoothly transition into owing money you don’t have.

How do prepaid credit cards compare? Because they’re prepaid, they don’t require a loan. In other words, you’re only spending money you do have. That doesn’t mean it’s money you need to have right now, though. A lot of prepaid card solutions, such as CASHlib, Neosurf, or Ticket Premium can be purchased when you have the money and can be used up to a year later. Think of it as a mini savings account where you set aside money for the things you love doing.

It can help your credit history



A credit card on which you have a good record of repaying debts on time can be a helpful tool. For example, if you’re applying for a bigger loan or a mortgage, your potential lender will want to see proof that you’re a responsible borrower. If you’ve never used a credit card, then they’ll just have less information to go by. But if you’ve had one and you’ve demonstrated good financial behaviour with it, it can give you a boost in the eyes of banks and financial institutions.

What’s the downside? The downside is that you’d be taking a loan to show that you’re eligible for a bigger loan in the future. Whether that’s a good choice for your personal situation is completely up to you. And it really depends on your financial strategy. However, do keep in mind that if your credit history is already a bit rough, you may not be able to get a credit card at all. Banks will always ask you to go through an application process before they issue a credit card, and sometimes bad financial choices in the past will stand in the way of you getting one.

How do prepaid credit cards compare? Prepaid credit cards won’t help your credit history. However, they also won’t hurt it. If you want to avoid potential difficulties paying a credit card debt off that could hurt your credit file, going prepaid is an option. A prepaid credit card will help you make payments on thousands of websites, without you having to worry about repayment or problems getting future loans.

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You have purchase protection



Hopefully, you’d never need to make use of this. But if something happens and you don’t receive an item you ordered online, or you have other problems with a purchase made on a credit card, you can get your money back. That's purchase protection. It’s one of the positive features of spending the bank’s money rather than your own - a bank has more legal muscle than you ever will to go after anyone who doesn’t honour their commercial contract.

What are the downsides? Getting your money back if there’s a dispute with a merchant, or if your card has been stolen, should be a phone call’s worth of work. However, the reality is that it can actually take a long time for the money to be back in your card.

But more importantly, this is one of the features credit cards have, which is only an advantage in specific cases. Ask yourself where you will be using your card. Is it a major gaming or luck-based entertainment platform? Then you may not need purchase protection, as there are no physical products involved (which could get lost, arrive broken, etc.). If you’re planning on buying a physical product with your prepaid credit card, that’s when purchase protection would be relevant for you.

How do prepaid credit cards compare? Although prepaid credit cards don’t offer purchase protection in the same way credit cards do, some issuers do offer their company-specific version of purchase protection. It’s always worth checking the provider’s terms and conditions beforehand.

And again, it’s important to keep in mind how the card will be used. Prepaid credit cards have an advantage over regular credit cards in that often a specific prepaid card will be accepted as a direct payment method on a list of websites. What does that mean? If you get a CASHlib, Neosurf, or Ticket Premium each of these providers have partnered with thousands of (luck-based) gaming, dating, entertainment and shopping websites. When you use your prepaid card to pay on a partner website, you can be sure that it’s a website you can trust. And if you run into issues with a purchase made on a partner website, most prepaid credit card providers will be able to offer assistance in resolving it, one way or another. Check with your provider for details on how this works.

You can earn rewards



Advantages prepaid credit cardsDepending on the credit card provider you have, you could earn different rewards such as cash back for purchases made with the card, or loyalty points like AirMiles.

What are the downsides? These rewards are of course only actual advantages in case you pay off your credit card bills within the month. Otherwise, the interest you’d owe would outweigh any benefits.

How do prepaid credit cards compare? Very well! If you make a purchase on a prepaid card’s partner website, you often get special discounts and promotions. If your favourite website is a partner of CASHlib, Neosurf, or Ticket Premium, you better keep your eyes open, because special offers will come. And there will never be any interest to pay for the card itself, which could potentially outweigh the gain. Not bad, huh?

Wide international acceptance



Chances are, wherever you are in the world, offline or online, the major credit cards are accepted payment methods. That makes them a logical choice if you’re looking for a payment solution that requires minimum research.

What are the downsides? Mainly, the price you pay for the wide acceptance of credit cards. Depending on your card issuer, there could be monthly, annual, service or other fees involved in using a credit card. Not to mention that if you’re abroad and need to withdraw cash using your credit card, that will cost you. Not only in terms of a high fee, but also in terms of your credit file. It’s considered a red flag if you use your credit card to get cash, as that’s a sure sign of urgent financial distress.

How do prepaid credit cards compare? You can use a prepaid credit card internationally. In fact, most providers, such as CASHlib, Neosurf or Ticket Premium have long lists of international partnerships with websites where you can use your prepaid card code as a direct payment method. If you choose for a physical prepaid credit card (as opposed to an online one), you can also use it to withdraw cash when needed. A small fee may apply, but your credit file will be unaffected.

What’s better about a prepaid credit card?



As you’ve seen so far, prepaid credit cards can match almost all the advantages offered by regular credit cards. But there’s more. Prepaid credit cards offer some benefits that regular credit cards cannot. These are:

Safe and discreet transactions



Yes, that’s right. You can get prepaid credit cards that don’t require any (or just a minimal amount) of personal or bank details while you pay. That means there’s less of a risk of someone stealing your data online.

This is a big advantage of going prepaid. Do keep in mind that the handy discreetness may be limited to purchases up to a certain amount. What the amount is, depends on your prepaid credit card provider, so make sure to check their terms and conditions beforehand. Check out some of the best prepaid options for safe buying online.

You can get and use a prepaid card immediately



You don’t have to apply for a prepaid credit card (unless you’re getting it from a bank). Many prepaid cards come in the form of a code, which you can purchase within a few seconds. Once you have the code, use it immediately to pay on your favourite website. That’s convenience in its purest form.

It’s easier to control your spending with prepaid credit cards



This can never be said enough. There’s great value in having a limited amount to spend. It helps you control your buying online and be responsible with your finances. A credit card may make certain shopping temptations too big, whereas prepaid lets you stay within your means. It’s also a nice way to invest in your hobbies. Then you can keep track of what and where you’re spending and never get into unnecessary debt.

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Ready for a safer, cheaper and more discreet shopping experience? Dive into our assortment, or have a look at this handy tool that will help you choose the best card for you.

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Disclaimer
Note that mobiletopup.co.uk only provides a platform via which you can buy a prepaid card, offered by different issuers. The terms & conditions of the issuer always apply to the product bought via mobiletopup.co.uk. We do our best to provide accurate information, however, we accept no liability for the accuracy of the information as for instance circumstances may change and information that was accurate at the time of posting will not necessarily remain so.


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