Improve Credit History With Prepaid Credit Cards
The prepaid credit card must be secured by the applicant, by paying for the use of the card before actually using it to make a purchase.This type of credit card requires you to deposit or pre-pay a specified amount of money, sometimes called a “security deposit,” in the bank of the card issuer.The credit line on the credit card will be limited by the security deposit amount, normally between $200 to $500, which has been prepaid for the use of the card.
Traditional credit cards are issued on a basis of whether or not you have a suitable credit rating, and when you are approved you will most likely have a specified credit line available to you.If you have a weak credit rating or if you have no established credit, you may be denied by traditional banks.
Prepaid credit cards may cut back or even eliminate the strict credit rating requirements, in some cases, they don’t even do a credit check or employment verification.Your credit card’s line of credit is guaranteed by the security deposit which you made before receiving the card, so the card’s issuer will receive payments if you happen to default on them.These cards are secured by the prepaid deposit made to the credit card issuer and this helps to establish credit or rebuild credit for nearly anyone.The requirements may be minimal on these prepaid credit cards and the approval rate is high, however you may have to be at the least 18 to 21 years old or have a U.S. citizenship.
Traditional cards like MasterCard and Visa and prepaid credit cards are all readily used and accepted in all of same instances and the same places.These prepaid credit cards can be used to pay bills online and over the phone and to withdraw cash from an ATM, and you can also use them to make purchases online or offline.
Some of the advantages of prepaid credit cards include the ability to establish or rebuild a good credit rating and help to avoid making late payments.There are some other advantages to prepaid credit cards: eliminate the need of writing checks and money orders and going to the post office to pay bills, and you can also have your paycheck directly deposited onto your card for your convenience.
Some things that are disadvantages of the prepaid credit card are higher interest rates and over the limit fees, and a monthly maintenance fee.Other disadvantages of prepaid credit cards are the necessity of paying security deposits which must be put down before you can use the card and the reality that these cards sometimes will not be accepted by car rental agencies.
It is of utmost importance for you to be on time with your payments and you must not go past the preset credit limits on your credit card agreement when you are trying to establish or rebuild your credit.Prepaid credit cards were added our list of financial sources to help us learn to keep track of where our money is going and how we can control what we are spending.
It is easy to allow ourselves become involved in the late payment cycle and before we realize it, we are two or three months behind and the fees keep getting higher and higher.By making on time payments consistently, you may find that most companies will increase your credit limit and/or return your deposit with interest.
