Prepaid Cards(my write-up on Prepaid Cards here) and Secured Credit Cards can both be used wherever regular credit cards are accepted, and both are for folks who can’t get approved for any of the more popular credit cards requiring better credit.
Neither option requires that you have good credit, or any credit at all for that matter. The big difference is this – Secured Credit Cards can actually help to build/rebuild your credit. Prepaid cards don’t affect your credit in any way.
Unlike Prepaid cards, you’ll receive a credit limit with Secured Credit Cards that is based on funds you deposit during the application process.
The most important thing to keep in mind is you have to use your Secured card responsibly, paying off your balances on time every month. Your activity is reported to the major credit bureaus, which will help your credit if you do your part.
Because this option is targeted to consumers with bad credit, you won’t be earning any rewards and there will be an annual fee involved. *Don’t forget to stay on top of your credit report and score.
Leave a Reply