Prepaid Credit Cards

Overview

Prepaid credit cards are designed for those who need a credit card, but have poor credit ratings. Today's U.S economy on Wall Street is struggling and many industries woes and their credit ratings are worsening day by day. For those who don't have a good credit, prepaid credit cards could be a chance to start over building their credit.

How It Works

Prepaid credit cards are usually issued by major credit card companies, like MasterCard, VISA and Discover. They are similar to regular credit cards that can be used for purchases and to make payments. The only difference is that they are secured by a cash deposit, which equals your credit limit.

Benefits

There are many benefits in owning a prepaid credit card. As they are issued by major credit card companies, they are well-recognized all over the world and thus accepted for payment in places that accept credit cards. Prepaid credit cards are an excellent way to begin rebuilding your credit.

Cost/Pricing

To own a prepaid credit card, you have to pay an annual fee like the other credit cards. This fee ranges from $30 to $200 a year, and this fee depends on the type of prepaid credit card you own. Other costs associated with possessing a prepaid credit card includes check bounce fees due to lack of funds or for exceeding your credit limit.

Timing

Making the choice to have a prepaid credit card is a personal decision. There are those who suggest that the best time to get a prepaid credit card is when you are ready to start rebuilding a solid credit history. Others suggest that if you are ready to be financially accountable for the card, then it's the right time to apply.

Companies/Industries

Several banks and major financial institutions offer prepaid credit cards through their corresponding institutions. Over the years, other establishments such as check cashing stores and even some catalogue companies have started to offer prepaid credit cards to those looking to rebuild a good credit history.