Prepaid Credit Cards
There are many people who have a poor credit history, and hence they are rejected as they apply for a credit card. So if you have a bad or low credit score, you can get a prepaid credit card. There are many other options as well, but a prepaid credit card seems the best one.
Prepaid credit cards are sometimes also referred to as secure credit cards, and they are pretty much like regular cards. They have a lower credit limit on them, and that credit limit is controlled by the amount that you deposit in the account on which the card is made.
But do not confuse them with debit cards. Prepaid credit cards are different than prepaid debit cards just in the same way credit cards are different than debit cards. While a prepaid debit card makes deductions on the money that is already deposited in the account, a prepaid credit card makes payments on credit.
Opening a prepaid credit card account
Just like you have to deposit money in a savings bank account, similarly, make a deposit into the prepaid credit card account. Once you get your account open, you will get a prepaid credit card that will enable you to make purchases on credit. Since the limit of this card is less, you cannot spend a huge amount that may land you later into trouble. So in essence, this is a positive point of prepaid credit cards. The purchasing power that you get with this card is pretty limited and it goes only till the amount of security fee that you have deposited upfront.
And since there is a security fee, there is no requirement of bills or interest rates. In this way, these prepaid credit cards are quite similar to debit cards as well.
When you get a prepaid credit card, you might have to deposit some account setup fee. It typically ranges from $5 to $10, but it can vary. And then there can be additional fees each time you deposit extra cash into it. But these extra charges do not look so bad when you have a bad credit score. You can easily make hotel reservations and get airplane tickets with these cards.
There are some disadvantages of these cards as well. There are some companies that do not accept prepaid credit cards to make purchases. For example, you cannot get monthly internet subscriptions using these cards. But advantages outweigh the disadvantages, and if you have a bad credit score, then this might be the only good solution that you can have. And another great thing is that this card wouldn’t lower your credit score any further. And since there is a limit to the amount of money you can spend, you cannot turn bankrupt with your spending.
If you are interested in getting a prepaid card, then you can contact your bank or other card issuing authorities. If you have a good credit score, you may even get a regular credit card, but a prepaid one would work great in case you have insufficient or bad credit history.
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