What Information is Required in a Prepaid Credit Card Application?

A prepaid credit card application is relative simple to fill out. Prepaid cards are not actually loans, and they do not therefore require any credit history. Instead, they are offered to even low-income, low-credit borrowers. Applicants only need to have the cash to put down in order to fund the card in order to move forward. The application will simply require personal information needed to protect the credit card organization legally.

Prepaid Credit Cards Are Not Loans

The organization issuing you a prepaid credit card is not actually lending you any money at all. Instead, you are paying the organization to convert your cash into a credit card format. You will have to put down the funds required to open the card. You will also pay a fee to open the credit card which is typically very small. The organization will then issue you the plastic so you may use the card just like a credit card. However, you will only be able to spend until you have reached your limits then you will need to load more money on the card in order to continue its use.

Prepaid Credit Cards Are Given to Bad Credit Borrowers

Because prepaid cards are not loans, they are available to even bad credit borrowers. For this reason, they are very popular among people who would otherwise not qualify for a card but need one for various reasons. It is important to have some form of credit card to make plane ticket reservations, for example, or make purchases online. If you do not have access to credit, you can use these prepaid cards instead, opening up doors that would otherwise be inaccessible. The lender does not take on any risk in the transaction and will overlook the fact you would be considered high risk for a traditional credit card.

Application Information Protects Legal Requirements

When you are applying for an actual credit card, you will have to supply credit and income information to prove you are worthy of the loan. With a prepaid card, you do not have to submit any of this information. That being said, the organization would be held legally liable if it did business with a known criminal or helped you commit a crime like tax avoidance. To prevent this, the organization will require your personal information to keep a record of the transaction. The organization may complete a background check for added assurance.

Shortcomings of Prepaid Credit Cards

Easy applications and guaranteed approval make these cards extremely attractive to bad credit borrowers. Unfortunately, they are not actually credit cards, meaning they will not help rebuild your credit when used responsibly. Further, you may still find there are establishments where your card will not be accepted since it is not an actual credit card. Finally, there may be fees assessed to use the card for certain types of transactions, meaning you will lose money by transferring cash to the prepaid card instead of simply writing a check or paying in paper money. 

 


Improve Your Credit Score - Free Consultation