Some Facts About Prepaid Credit Cards
Prepaid credit cards are those types of credit cards you pay for before you use them.The bank of the credit card issuer must receive a “security deposit” of a certain amount from the credit card applicant to pay for the prepaid card.You are required, as a rule, to pay from $200 to $500 as a security deposit and the credit limit on your card will be in line with the prepaid deposit.
If you have applied for any traditional credit cards, you probably were approved or denied based on your rating and if approved, you were issued a credit card that has a specific limit on it’s credit line.Traditional banks usually will deny the use of a credit card or line of credit to those who have a damaged credit rating or no credit.
Those lending institutions who issue prepaid credit cards may not bother to do a credit check or verify your employment, as they may eliminate the strict credit rating requirements usually enforced by the traditional credit card issuers.In the event that you may default on your payments, the issuer of the credit card will be have a guarantee of payment by the security deposit you had to put in their bank.The prepaid credit card is a good way to establish credit or rebuild poor credit and nearly everyone is eligible because these cards are guaranteed for payment by the prepaid credit card deposit.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.
Every place you can use traditional credit cards such as Visa and MasterCard, your prepaid credit cards will be welcome.You can use prepaid credit cards online and offline, you can pay bills online and over the phone, and you can withdraw cash from ATM machines with them.
Prepaid credit cards offer can offer such advantages as allowing you to rebuilding credit or establishing credit for the first time and they can help you avoid making late payments.Other advantages of the prepaid credit cards are the elimination of the need to write checks and money orders and make trips to the post office to pay monthly bills, and your paycheck could be deposited directly onto your card.
Their higher interest rates, higher fees for an over the limit balance and a monthly maintenance fee are a few of the disadvantages of the prepaid credit cards.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 doesn’t matter whether you are establishing credit or rebuilding your credit rating, you must be on time with your payments and make sure you do not go over your credit limits.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.
The late payment cycle is easy to find ourselves to be trapped in and soon we can be months behind and struggling with all of the late fees.By making on time payments consistently, you may find that most companies will increase your credit limit and/or return your deposit with interest.
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