What Are Prepaid Credit Cards For?

What Are Prepaid Credit Cards For?

by AJ Adams

Prepaid credit cards are useful tools that are often utilized to improve one's credit. When someone is not able to make their payments on time, or has other financial trouble, their credit can be hit pretty hard. But, a prepaid credit card can help them get back in good standing with lenders. It works essentially the same as a debit card, and only allows you to spend money that you have already got. This will help you avoid many of the pitfalls that have given credit cards notoriety for being financially ruining.

To open a prepaid credit card, you will have to deposit a small fee. The fee is usually between 5 and 10 dollars. After that, you can deposit any amount of money through your bank account. This money is added to the balance of the card. After it has a balance, you can use it just like a normal credit card, to do anything that you would regularly do. Therefore you are given the convenience of a credit card without the temptation to spend more than you actually have.

Your activity on a prepaid credit card is reported to the credit bureau, so over time you can gradually regain your credit to decent standing. With poor credit, if you try to get a regular credit card, you won't be able to find anything with decent terms. You'll have to deal with high APR rates and inflexible deadlines. But if you can improve your credit with a prepaid credit card, you'll be able to get a regular card with terms that you can agree to.

So if you suffer from poor credit, you should look into getting a prepaid credit card. Instead of applying for one with horrible terms and rates, you can use one that will keep you out of debt and start improving your overall credit.