Pre-paid Credit Cards And Secured Credit Cards

Consumers having bad credit history often look to rebuilding their credit score or they try to avoid monthly credit cards bills and for this reason they consider taking out prepaid credit cards or secured credit cards.  In such condition, consumers must be aware of the fact that prepaid credit cards and secured credit cards cannot be interchanged. They have to understand the basic difference between these two cards before applying for either of these cards.

Facts about Prepaid Credit Cards

Prepaid Credit Card

 

A prepaid credit card is actually a debit card. To get it, you have to open an account in a bank and request them to issue you a debit ATM card. Many banks issue debit cards automatically when the customer opens an account. Prepaid credit cards are very much similar to the typical credit cards. These cards can be used for any purpose where credit cards are used, as these prepaid cards either spots Visa or the MasterCard logo.

Benefits of Prepaid Credit Cards

The plus point of prepaid credit card is that it does not require users to show up their credit history. Another benefit of prepaid credit card is that there is no fee for annual membership. There are no monthly bills and interest charges on prepaid credit cards.

Lost/Stolen Policy of a Prepaid Credit Card

Customers should it immediately to the bank when the prepaid credit card is lost or stolen. It will save customers from paying off any fraudulent charges.

Prepaid credit card customers should also check the lost/stolen terms and policies by the bank to check the lost or stolen reporting time limit set by the financial institution.

Important Tips

If you want to apply for a prepaid credit card then you should check which financial institutions are offering it. When you sign the legal agreement make sure you have carefully gone through the terms and policies. If you are applying online then take out the fine print to go through it carefully.

Facts about Secured Credit Cards

Secured credit cards are quite similar in appearance with prepaid or traditional credit cards, but they are not similar with these cards in their functioning.

Secured credit cards are solely funded by the card holders and this funding is done before the official usage of secured credit card. The starting funds of a secured credit card determine the credit limits. For instance, if a credit card holder has funded $650 then the credit limit of that card is $600.

Downside of Secured Credit Cards

Secured Credit Cards

Secured credit cards apply relatively higher interest rates on the outstanding balances of a card holder. Besides it, many secured credit cards also apply annual membership charges and customers have to pay off monthly bills. Customers have to pay off higher interest rates on secured credit cards due to having poor credit history.

Advantage of Secured Credit Card

Fortunately, cardholders can get a secured credit card to repair their bad credit history. This is because those customers cannot take out traditional credit cards, which have gone bankrupt or contain uncomplimentary items on their credit reports.

Understanding the Usage of Secured Credit Card

Customers have to understand the right usage of the available balance of their secured credit cards. For instance, if a customer wants to use his balance then they should deposit the funds of $1000 to use $500.

 

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