It seems as though lmost everybody today needs a credit card. A credit card makes shopping easier as most business establishments accept credit cards as payment for their merchandise or services. And if you're one who enjoys the convenience of online shopping, a credit card is often necessary to pay for the items ordered online.

Unfortunately, not everybody is eligible for credit cards. And others are not interested in using traditional credit cards for one reason or another. Those who do not qualify for regular credit cards - or those who choose to stay away from credit cards - can instead opt to use prepaid credit cards.

What makes prepaid cards different?

With prepaid credit cards, you need to deposit funds with the issuing bank before you can use your card. You can then pay for anything using your prepaid credit card until you use up your deposit.

Then, if you wish to use your card again, you will have to reload it (make a new deposit) first. Anybody can get a prepaid credit card. All that you need to do is make the cash deposit and the bank will readily approve your application and issue you a prepaid credit card.

Benefits of prepaid credit cards

Here are some potential advantages to choosing and using prepaid credit cards:

1. Banks will often issue prepaid credit cards to a wide range of applicants, even those with less-than-perfect credit scores. In exchange for the cash deposit, the issuing bank may not need the customary credit checks, employment verification, proof of income, etc.

2. The risk of accumulating debt is theoretically lower, as spending with a prepaid card is limited to the amount loaded on your card. There is no need to wait for your credit card bills and there are no balances to monitor and pay monthly. In fact, a prepaid credit card can help you improve your money handling skills.

4. Cashing checks may not be necessary, as many prepaid cards allow you to make direct deposits on your prepaid credit card. Direct deposits may even be free of charge.

5. Many banks that issue prepaid cards also run their own rewards programs where they offer rebates, gifts and other incentives to frequent users.

Costs involved with prepaid credit cards

Although prepaid card users will avoid finance charges that may be imposed bu using a traditional credit card, there are often fees involved with using prepaid cards. Possible fees include:

• Activation fees
• Annual fees fees
• Application fees
• ATM fees
• Monthly fees
• Overlimit fees
• Reload fees
• Transaction fees

Know the charges

The charges on prepaid credit cards vary widely from one issuer to the next. Compare multiple offers and make a list of possible fees that you would incur. Based on your needs and lifestyle, choose a card that offers the best chance of a fee-free experience. Carefully read the terms and conditions of any card before submitting your application.

Know and understand all fees that will be charged by the issuing bank. Using a prepaid credit card can be a wise financial decision as long as you are aware of fees involved and take steps to avoid unnecessary fees from being charged.