March 6, 2015
Prepaid Credit Cards (Secured Credit Cards):
There are basically two kinds of credit cards available for the people, who have a bad credit. These are the prepaid cards and the secured credit cards. So, if you have a bad credit history, and require a credit card for yourself, you can check out both the cards.
Some Information on Prepaid and Secured Credit Cards
Both these cards are separate and are not to be mixed. While, both these cards require money to be deposited prior to using them, they are quite different from each other in all the other aspects. For getting the secured credit card, one will need to make security deposits against credit limits, so that the card can be approved. This security deposit is kept in the savings account, and will be used when there is a default on payment on the credit card. The purchases that are made with these cards will go against the revolving credit limit. When the credit card balance is paid off, the available credit increases again. The security deposit is there on these cards because of the bad credit history of the borrower.
Prepaid cards work in a different way. These are actually not credit cards, as there is not credit limit. The deposit made on the card goes straight into the account, and when the card is swiped for purchases, the balance is deducted directly. So, when the deposit is spent, one would have to redeposit the money, so that he can start spending again.
The fees on these two cards vary. The fees on the secured card is quite similar to that of credit card, with application and annual fees, late fees, and finance charges. Some of these fees can actually be avoided if the card is used responsibly. The fees on the prepaid cards depend upon the card that you choose. It could have monthly maintenance fees, activation fees, etc. Other than that, fees might have to be paid for reloading the money, and withdrawing the money from ATM.
So, the choice of the card is totally dependent on you. If you wish to improve the credit score, you should go for the secured credit card. These cards can be converted into unsecured cards after the completion of 12 or 18 monthly payments. And, for people, who wish to avoid the banks, can choose to go for the prepaid cards. These are also good for the students and teenagers, who get monthly allowance from the parents.
These cards can be a great way to make your payments and, if they report to the credit bureaus, build your good car credit.
77¢ and a job gets you a car!*