Prepaid credit cards are very similar to gift cards. The difference is that a gift card can only be used at specific retailers, for example at Marks & Spencers or WHS or HMV etc. Prepaid credit cards are not specific to one place. They can be used at physical retailers, they can be used for online shopping which in the contemporary world is about as common as in the physical high street or shopping centre… and you can use your prepaid card to pay bills.
A prepaid credit card can be used anywhere that accepts credit cards hence they are also similar to credit cards. But there are differences. Your prepaid credit limit equates to the amount of money you have originally paid onto the card. In this way they are also similar to debit cards… albeit sometimes debit cards are loaded with overdrafts! Hence a prepaid credit card possesses the great advantage of imposing financial astuteness on the card holder.
This is because with traditional credit cards some individuals over-spend because it is as if free money has been given to them. It is only when the credit card bill comes at the end of each month that they realise that on the contrary, traditional credit cards are expensive. The risk of debt is high with traditional credit cards and is non-existent with prepaid credit cards. ??You can easily purchase a prepaid credit card. Most financial institutions including your bank will offer them.
So for example Lloyds TSB and Nat West offer them. Using a card at a store is very simple indeed. You simply present your card to the person at the cash till or maybe you will be able to swipe the card yourself. Using prepaid credit cards are therefore as simple to use as traditional credit cards. It is always sensible to check your remaining balance on your prepaid card. If you run out of funds top it up again at your bank or online through transferring money from your debit card to your prepaid card.
Even if you have a bad credit history you can still apply for… and get… a prepaid credit card. Hence that is a positive ‘difference’ between prepaid and traditional credit cards. Finally a positive ‘similarity’ with the traditional credit card is the fact that you can use prepaid cards globally.