Prepaid Credit Cards
If you’ve been rejected for a credit card recently it may be because your credit score or your credit profile shows you as a risky customer for the credit card companies to take on. This can obviously cause problems for you since credit card purchases and credit card use are a convenient part of everyday life. But this doesn’t mean that there are no options available to you.
Prepaid Credit Cards
Prepaid credit cards are credit card accounts that give you the flexibility of using cards that are pre-paid by you so that any amount that you use with your card is coming out of a cash balance you have already deposited. This can be a very valuable tool for people who have a problem controlling their spending and maintaining good credit. Prepaid credit cards are accepted everywhere just like any other credit card.
When your balance runs out, you simply have to redeposit money in order to replenish the balance on your card. This is very similar to using a debit card or a bank checking card.
The Fees
One downside to setting up prepaid credit cards that you have to pay fees to actually set up your account. These are going to vary from company to company but usually it’s a nominal amount around $10-$15. Prepaid credit cards also require that you pay a small fee every time you fund your account. This is definitely a drawback but when you consider that these cards will give you the ability to charge at any place that accepts credit cards, the positives will most likely outweigh the negatives.
For Those With Bad Credit
If you have bad credit, bankruptcies, charge-offs or other negative information on your credit report, a prepaid credit card may be the only choice you have. However, what a prepaid credit card will not do is improve your credit history. Since technically no one is extending you credit on a prepaid credit card, there is no payment history to use as a reference.
Prepaid Credit Cards vs. Secured Credit Cards
If you have bad credit, one of the other options available to you are secured credit cards. The difference between secured credit cards and prepaid ones is that you secure your credit card with some form of collateral. Obviously, if you don’t have collateral this won’t be an option but these cards will actually be reported to the credit bureau by the bank and, if you have satisfactory payment history for 18 months, most banks will switch your account to an unsecured credit card.
Ultimately, prepaid credit cards are providing you with the convenience of being able to use a charge card even if you have bad credit. There are no credit checks or income checks and in today’s society, this convenience can go a long way and give you the flexibility you need to purchase goods and services.
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