Prepaid Credit Cards-A Credit Card Option for a Bad Credit Rating

A prepaid credit card is similar to a checking or savings account.  You deposit money into your prepaid credit card account just like you deposit money into your checking or savings account.  When there is money available in the account, you can use your prepaid credit card.  These credit cards can be used for the same purposes as traditional credit cards. 

Similar to debit cards, prepaid credit cards can only be used when there is money available in the account.  Since the money is withdrawn as soon as a purchase is made, there will never be a large accumulating debt balance on the card.  You deposit the money in the account and you can spend and spend until it is gone.  It’s as simple as that.  There are no bills to pay at the end of the month and you will never incur interest charges. 

Most prepaid credit cards require that you to pay an upfront set up fee.  Fees typically average about $10, but some can be as low as $5.  Added fees are also charged when you deposit more money onto the credit card. 

If you have bad credit and cannot get approved for a traditional credit card, this is a great alternative for you.  You will be able to use your card to make hotel, airline and rental car reservations.  You can also use the card for online purchases.  Using your prepaid credit card will help to rebuild your credit rating. 

Prepaid credit cards can be used to make purchases for the same items and services that can be purchased with a conventional credit card.  However, in most cases, prepaid credit cards cannot be used as an automatic payment option for monthly bills. 

For example, most companies will not permit you to use a prepaid credit card to pay your monthly cable or cell phone bill. 

The reality in today’s world is that it is absolutely necessary to own a credit card.  Some purchases like hotel reservations or flight reservations are impossible to make without a credit card.  A credit card is also necessary for the convenience of being able to shop online. 

If you have a history of bad credit, prepaid credit cards might be the answer for you.  You will benefit from most of the perks of the traditional credit cards and you won’t have to worry about running up a high balance and paying soaring interest charges.