A credit card is essential for all travelers. Without a major credit card, one cannot make reservations for hotels, motels, car rentals or airline flights. In addition, a lot of merchants have stopped accepting travelers’ checks and the exchange of money has become an alarming risk because of pick-pockets and the increase in counterfeit currency.
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Still, many people cannot obtain a credit card because of poor credit. Thus an alternate method for vacation spending has emerged: pre-paid credit cards.
A pre-paid credit card functions similarly to a debit card, however it is not linked to a savings or checking account. The cardholder deposits a balance onto the card and then uses the pre-paid credit card for purchases anywhere the card is accepted. Once the card is empty, the cardholder cannot spend any more until they deposit more money onto the card. Since the money belongs to the cardholder, there are no monthly bills and no interest charges.
Using a pre-paid card for vacationing is very advantageous:
- No interest charge
- The credit limit is variable depending on the amount on the balance of the card
- They give people with a bad credit history the option to use a credit card
- The card it not tied to a checking account
- They can be replaced if lost or stolen, with the remaining balanced loaded onto a new card
- Many providers offer an exchange rate
- Cardholders can reload their cards online or at various reload locations
- Being that most pre-paid credit cards are MasterCard, Visa or Maestro branded, cardholders can shop anywhere in the world where these brands are accepted - on the Internet, over the phone and on the street
That said, purchasers should still carefully review the terms and conditions of the card. Disadvantages for vacationing with a pre-paid card may include:
- An application fee
- An activation fee
- Top-up or loading fees
- Point of Sale fees
- ATM fees
- Card Currency
Nonetheless, a pre-paid credit card is ac excellent choice for travelers who cannot obtain a regular credit card or those who are tired of the fees and interest charges applied to a typical credit card.
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