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J.G. Wentworth Blog

Why a lot of people with great credit still prefer to use prepaid cards

Reloadable cards that can be used anywhere traditional credit cards are accepted, prepaid cards are becoming more and more popular. Although many consumers with poor credit will turn to prepaid cards as an alternative, many others—even those with great credit—still find that prepaid cards offer a plethora of advantages. Some of these terrific benefits include:

Financial protection

With certain transactions and purchases, there are times when your credit card will be out of your sight for several minutes. A common example is when paying for a restaurant bill. During this time, it’s impossible to know how many people might have seen your credit card and if anyone copied down your information, with an intent to use it fraudulently. Another potential risk of using credit cards is when shopping online. Although credit card use is usually required when shopping online and relatively safe (as long as you are using a secured connection and ordering from a reputable retailer), security breaches do happen and customers’ credit card information can be compromised. With prepaid cards, there is a lot less at risk, if any at all. Many consumers with prepaid cards will simply load on the money they plan on spending for a specific outing or purchase—perhaps with a little bit extra as a buffer. This way, if their credit card information is obtained and used fraudulently, there is little to no financial loss.

Controlled spending

Many consumers who qualify for traditional credit cards simply choose not to apply for any because they don’t want to get into debt. After all, when it comes to credit cards, there can sometimes be that temptation to buy certain things that you know deep down you can’t really afford or pay off anytime soon. If you don’t fully trust yourself with a traditional credit card, a prepaid card can be the ideal solution. Because you can only spend what you load onto the card, you’ll be less likely to overspend and more likely to stick to a budget.

No interest charges

It can be difficult to qualify for those low-interest credit card offers; you might need near-perfect credit in order to qualify. Interest can easily add hundreds—or even thousands—of dollars to your credit card transactions, and it’s these high APRs that make many consumers steer clear of credit cards altogether. But with prepaid cards, there aren’t any high interest rates to worry about—in fact, there is no interest imposed at all on prepaid cards.

No minimum payments

It’s all fun and games until your monthly credit card statement arrives. Even if you’ve used your credit card responsibly, for many people, having just one extra bill to worry about and another payment to make every month can cause a lot of financial stress. But that’s another advantage of loading money in advance onto your prepaid card—you already paid for your purchases, so there are no minimum required payments every month.

These are just some of the many benefits that prepaid cards can offer when compared to credit cards. If you’re ready to see why millions of other consumers in the United States prefer to use prepaid cards, learn more about our Visa® prepaid card program today.

Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.