Build Your Credit with Prepaid Credit Cards

If you are looking for a good way to build credit from either no credit or bad credit, getting a prepaid credit card may be your answer.  Opening up a prepaid credit card account is easy.  You simply apply just as you would like a regular credit card.  The difference is that you won’t have a problem being accepted as you would with a credit card since you’ll be using your own money.

Once approved, you will deposit money into the prepaid credit card’s account.  Then you are free to use your card anywhere that accepts regular credit cards.  You can use it to book airfare, hotels or just regular purchases at a store.  The only difference is that you are using cash rather than credit, which means you stay out of debt and show creditors that you are being financially responsible.

One of the biggest disadvantages of prepaid credit cards is you will have to pay a fee every time you deposit money into the account.  You also will have to pay a fee for every time the card is used.  It’s a lot like using an ATM that isn’t associated with your bank and you have to pay a fee each time you use it.  These fees can add up but if you think about the cost of debt, the fees don’t seem so bad after all.

The other disadvantage is that not everyone will accept a prepaid card because of fear that you won’t have enough funds on the card to pay for what you are purchasing.  This is usually the case with pre-authorizing something because they want to make sure if you don’t follow through with a reservation, you’ll have money on the card to pay for the penalty.

What are some of your experiences with prepaid cards?

(Photo Credit: http://www.flickr.com/photos/ingorrr/355584016/)

June 8th, 2009 by Marcelina Hardy | Posted in Credit Cards, Debt Management | (0)