Are you familiar with pre paid credit cards? Perhaps you may notice the ads that promise instant approval for anyone- even for people with no credit history or with bad credit. True enough, anyone can easily get a prepaid credit card regardless of his/her credit rating. But is this type of credit card for you?
Who Should Get A Pre paid Credit Card?
While pre paid credit cards offer instant approval, it’s important to understand that these are not the same as a regular credit card. First, prepaid cards do not provide its holders with a borrowing limit. Second, these credit cards require the submission of a cash deposit in the cardholder’s account. Third, the cardholder can only use a prepaid credit card if there is an available balance in the account.
However, despite the limitations, those who have a problem with their credit history can use pre paid credit cards to rebuild a poor credit rating. Through regular use of this card, the cardholder can slowly but surely build up credit history without the risk of bad debt.
Who should apply for a prepaid credit card? If you cannot qualify for a regular credit card and you want to establish or build credit, then a prepaid card is a good option. For parents who need to send money to their kids in college, providing them with their own prepaid credit cards is the most convenient and safest way to send and receive cash. Travelers can also use prepaid credit cards as a safer way to pay for all their travel expenses..
How to Get A Pre paid Credit Card?
Pre paid credit cards can be acquired by visiting your nearest bank or by submitting your application online. To get approved, the applicant must first open a deposit account and submit the minimum required payment. The amount can range anywhere from $200 to $500 and above, depending on the prepaid card issuer. Keep in mind that the amount of your security deposit will also determine your spending limit.
Since charges are automatically paid using the funds in the cardholder’s account, there is no need to worry about additional interest rate fees. Nevertheless, there are other costs that can be expected such as the set-up fee, maintenance fee, transaction charges, and possible penalty fees.
Can you use a pre paid credit card for establishing credit or repairing bad credit? The answer is yes as long as your chosen issuer offers credit reporting service to the three major consumer reporting agencies. Before making choice, check out the complete terms and conditions of the prepaid credit card.
About the Author
Tara Tiemann is a credit analyst for Go-prepaid.com which has been a resource site for people who want to live debt free. If you are on a budget using prepaid debit cards,prepaid credit cards and prepaid cell phone service can save you big money!