Prepaid Credit Cards are issued by banks and financial institutions and can be used for transactions in a very similar way as a credit card. Prepaid credit cards come loaded with funds and works using a very simple process. Unlike normal credit cards, which functions on borrowed credit from the bank, customers can make purchases using the funds available on the prepaid card. Similar to gift cards, purchases can be made until funds are available in the card.
The biggest advantage of a prepaid credit card is that customers can make purchase transactions without incurring any debts and paying huge interests. Also there is always the limit that has to be adhered to, as purchases have to be made only up to the amount available in the prepaid card. A nominal issuance fee might be charged by banks when a prepaid card is offered and the credit score of an individual is not a key criteria when approvals are done. On the same lines, prepaid credit cards do not contribute immensely to improve the CIBIL score of an individual.
There are different types of prepaid cards available in the market and this varies depending on the issuer.
Open looped cards - Open looped cards are branded with the network they are affiliated to and are also called open system cards. Every card will carry the brand logo of the affiliate and will be issued by banks in association with American Express, Visa or MasterCard. All open looped cards are accepted at locations and merchant outlets approved banks.
Closed Loop Cards - The acceptance of closed loop cards is restricted to the affiliated merchant outlet for buying services and good at only those outlets. Gift cards mostly are issued as closed loop cards.
Semi-Open Looped Cards - As hybrid cards, Semi-Open Looped Cards are accepted by numerous merchant outlets or chains, who are affiliated with the card. Most cards are issued by retail chains or shopping malls and can be used at locations carrying stores with these brands.
Reloadable cards - Most prepaid credit cards come as reloadable cards, where the customer can add more funds, once the amount held in the card has been used.
Non-Reloadable cards - Again gift cards fall under this category as once the customer uses the money available in the card, reloading cannot be done. Purchases can be done only up to what is available in the card.
As one of the best prepaid card available, the features of the HDFC Bank ForexPlus card have been explained below.
State Bank of India offers multiple types of prepaid credit cards depending on the requirement of the applicant. Customers taking the SBI prepaid card need not have any bank account and can be used for e-commerce transactions and cash withdrawals. The various cards offered by State Bank of India are:
YES Bank offers various types of prepaid cards for various purposes ranging from travel, gifting and for corporate employers. The various cards offered by YES Bank are:
ICICI Bank offers different types of prepaid cards for various purposes ranging from travel, gifting and for corporate employers. The various cards offered by ICICI Bank are:
Baroda Gift Card
Baroda TravelEasy Card
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