What Are Prefunded Credit Cards?

Prefunded credit cards are reloadable charge cards that are not linked to a bank account or a revolving line of credit. Because of this they require money to be loaded onto the card before use and after funds are depleted. Prefunded credit cards do not require a credit check prior to issue nor does their use affect the user’s credit rating. Cash advances are not possible with prefunded credit cards, however they will not incur interest charges or late payment fees.

What Are The Pros Of Prefunded Credit Cards?

Unlike debit cards, prefunded credit cards do not require a user to maintain a bank account. A card may, in fact, act as an alternative for those unable to qualify for a bank account. This also means a lost or stolen card cannot endanger the user’s banked funds. Because no money is lent nor is any credit being accessed, prefunded credit cards don’t require a credit check and do not influence a user’s credit rating. Subsequently they will never incur interest charges or late payment fees nor will the user ever go into debt. Prefunded credit cards are useful for those wishing to maintain a budget and control spending.

Prefunded Credit Cards Vs Debit Cards

The main difference between prefunded credit cards and debit cards is that debit cards are linked to a bank account while prefunded credit cards are not. To use a debit card, you must qualify for a bank account, which may require a credit check, and have deposited funds available for spending. If your bank account is equipped with an overdraft facility your debit card will be able to access it, although fees and interest charges will be involved. A prefunded credit card, on the other hand, is not linked to a bank account or line of credit which means the user will not undergo a credit check, never go into debt, incur interest charges or have access to cash advances. A prefunded credit card’s spending is limited by the amount of money loaded onto it.

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