Prepaid Credit Cards
Prepaid credit cards are usually used by people who have poor or no credit as a way to build good credit. The way it works is that on a prepaid credit card, money is deposited into the account and charges are taken out of that balance.
Technically, it isn’t really a “credit card” since you have no credit line with the prepaid card. You can use prepaid credit cards anywhere you’d use a normal credit card. What’s nice about it is that you can spend the money you have in the card without worrying about going into debt since you’re really only spending the money you put in there in the first place. It’s like a checking or savings account and there are no interest charges.
Sometimes these cards are referred to as teen credit cards because parents use them to give to their children as a safe way to give them a credit card. Even though these prepaid credit cards are a good way to rebuild or establish your credit, they usually have very high fees associated with them.
Some examples of prepaid credit cards are SilverCard Prepaid MasterCard®, AccountNow Prepaid MasterCard®, MetroPCS Prepaid Visa® Card, NetSpend MasterCard Prepaid Card and of course many more.
If you’re considering ordering one of these prepaid cards, be sure to familiarize yourself with the terms and conditions. Above all, don’t spend money that you don’t have. Unfortunately we are conditioned to put everything on credit, and that isn’t always a good thing. Even if you’re using money you have for a prepaid credit card, you should still be diligent not to spend it on things that you can do without.
