Are Prepaid Cards the right Bad Credit
Credit Card for You

With the increase in bankruptcy and low credit scores, many people are looking for bad credit credit cards. One of the most popular types of bad credit credit cards is a prepaid card. Prepaid cards have benefits and drawbacks, which you need to consider before you decide to get one.

Prepaid cards share a similarity with secured credit cards. Both require a deposit of money in order to establish credit. Secured credit cards have a deposit that establishes your credit limit. Once you pay the deposit, you are able to continue charging up to that pre-defined limit. Prepaid cards, on the other hand, can only be used when there is money in the account. If you have a pre-paid card for $200 and spend that $200, you’ll have to deposit more money if you want to spend more.

Prepaid credit cards are helpful as bad credit credit cards because they allow you to have a credit card when you need one. Most have a Visa or MasterCard logo and can be used in place of a credit card for reservations and car rentals. They are also good to use in order to set a specific spending limit for yourself.

On the other hand, prepaid cards are not reported to the credit reporting agencies. This means that using a prepaid card will not improve your credit score in anyway. If you need to re-establish your credit, you might be better off finding a secured credit card with a good interest rate.

Prepaid cards are a good choice if you need to limit your spending and don’t mind not rebuilding your credit right away. However, if you want to take steps to improving your credit overall, prepaid cards are not the best bad credit credit card for you.