Prepaid credit cards appeared in Australia about three years ago. Ever since they are gaining popularity among users or all ages. The fact that users require no credit history and absence of monthly repayments makes it a very attractive way to organise your plastic money.prepaid gift balance

Different Types of Prepaid Credit Cards

There are two different types of prepaid cards: charge cards and gift cards. A charge card is normally linked to your other savings or cheque account. It gives you a Visa or MasterCard access to your own funds. So, each time you make a purchase with this card, the funds are drawn from your own account. There is no credit from the bank and there is no balance to repay.

But once you run out of your own money, that’s it. You’ll need to deposit (or “prepay”) more funds before you can use this card again. The second type is a Gift Card. It’s like a normal gift card that you can get from a retailer, but with Visa or MasterCard functionality attached to it. So, if you have a $100 Prepaid Credit Card, you can spend this money at any retailer accepting credit cards. Once you run out of credit, there is usually no way to “recharge” it.

Benefits of Prepaid Credit Cards

1: Convenience

Cardholders can use prepaid cards to pay for shopping, petrol and utility and household bills, basically anything and anywhere credit cards are accepted. It can also be used for making payments on the phone or online and, in some cases, withdrawing cash at ATMs.

2: Safety

Cardholders can make purchases and withdraw cash when they need it. Access to funds is the same as with any other credit card. Use your pin or sign the receipt.

3: Protection

A prepaid card can be replaced if lost or stolen and carries the same liability protections against unauthorized purchases as other credit cards.

4: Financial management

Itemized card statements and online reporting that is available to charge cards, make tracking expenses and monitoring spending activity easy. Manage your spending by loading a limited amount of money on the card. You can only spend what is available on the card.

Prepaid Credit Cards in Australia

Back in 2006, Visa’s executive vice-president for Australia and New Zealand, Bruce Mansfield, said that he expects a strong take-up of prepaid cards in general. “Australians are pretty savvy money managers and a prepaid card is a perfect money management tool,” he says. “Australians have lapped up prepaid and disposable mobile phone cards and I expect similar long-term results in Visa prepaid.” (Money Magazine’s June 2006 issue). 

Ever since, the popularity is growing with major banks offering prepaid card in store or on the internet. There are many bank and non-bank organisations offering prepaid credit cards.