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How to Apply for a Prepaid Credit Card

Types of prepaid credit cards offered by some of the biggest banks in Canada - Ways to file a prepaid credit card application

What is a prepaid credit card?

A prepaid credit card is a bank card with a credit (secured by deposit) that the holder has made with the bank. Typically, the credit limit of a prepaid credit card is the amount of money deposited with the issuer or slightly higher.

Who are prepaid credit cards meant for?

Prepaid credit cards cannot be charged with more money than the holder has deposited with the bank. Since there are no interest charges and monthly statements going with these cards, they are the perfect solution for people with bad credit score or first-time borrowers. With this type of card, you can set spending limit for you and your children. Prepaid cards are great teaching tools. You can sign up on behalf of your teens, load a certain amount on the card, and see how and where they are spending it. The card will meet the spending needs of your children and help them develop responsible financial behavior. Thanks to the option of tracking online purchases, you can discuss budgeting and spending with your children. An array of options for budgeting and payment are available for adolescents. You can base your choice on flexibility and convenience. Prepaid credit cards are safe since you don’t have to carry cash with you. In addition with Visa and MasterCard, if your card is lost or stolen, your money is protected by the no liability policy.

There are various types of prepaid cards: payroll cards, teen cards, employee incentive cards, disaster relief cards, government stored-value cards, gift cards, and flexible spending account cards, among others.

Drawbacks of prepaid credit cards

Before filing an application for a prepaid credit card, consider the following disadvantages these cards have: first, there is a so called set-up fee that the card issuer charges to open an account on your name; second, there are bulky taxes for you to pay each time you decide to put some cash in your prepaid credit card (not to mention the membership fee you’ll have to pay each year). Also, many online merchants do not accept prepaid credit cards because they cannot be sure that there is enough cash in it to cover the purchase.

How to apply for a prepaid credit card?

If you’ve weighed the abovementioned advantages and disadvantages and decided in favor of having a prepaid credit card, here are the steps you should take to file an application for your card. If you have access to the internet, you can visit your bank’s website and fill in an application online. In the first part of the application form, you are required to provide your personal and contact information such as your name, address, social security number, phone number, etc. Part two requires information on your current financial status such as your monthly income, recent credit score, whether you have other loans and credit cards on your name, etc.

Alternatively you can visit the office of some of the prepaid credit card companies and file an application

Best prepaid credit card deals

BMO’s Mosaic Travel Mastercard is another good deal – the card costs about ten dollars to get, has no reload fee and is valid for three years.