Prepaid Credit Cards To Build Credit Rating

By Author: Alisdair Cosgrove
Total Articles: 184
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You pay for the credit card before using it, this is why it is called a prepaid credit card.You will have to deposit or prepay a specific amount of money which is sometimes called a security deposit into the bank of the card issuer.The credit line will be limited to the security deposit amount, normally between $200 to $500, which you have prepaid for the use of the card.

When you apply for a traditional credit card, you are approved or denied based on your rating and if approved, you are issued a credit card that has a specific limit on it's credit line.When you do not have the required good credit established, the traditional banks will not issue you a credit card.

With prepaid credit cards the rigorous credit rating requirements may be eliminated and in some instances they may not do a credit check or make verification of your employment.The security deposit will ensure that the issuer receives payment if you should happen to default on your payments.These cards are secured by the prepaid deposit and this helps to establish credit or rebuild credit for nearly anyone. Prepaid credit cards have a high approval ...
... rate because the restrictions on them are few, there could be age restrictions or U.S. citizenship may be required.

Every place you can use traditional credit cards such as Visa and MasterCard, you can use prepaid credit cards.These cards can be used to pay bills online or on the phone or to access cash from an ATM machine or to do online and offline shopping.

Prepaid credit cards can help establish or rebuild credit and keep payments from being late.Other advantages to the prepaid credit cards are that your check can be directly deposited onto your card and it will eliminate the need to write money orders and checks and go to the post office.

The prepaid credit cards have disadvantages such as interest rates that are often higher, higher over the limit fees and a monthly maintenance fee.Some of the disadvantages to the prepaid credit card are the possible inability to use it at a car rental agency and the security deposit that has to be paid before using the card.

It doesn't matter whether you are building your credit or rebuilding it, you must be on time with your payments and make sure you do not go over your credit limits.The reason prepaid credit cards were introduced was to help us learn how to be responsible for our finances and develop better spending traits.

After we let our payments go for a couple of months, we are caught in a never ending cycle of late payment fees and they can really add up very fast.We can prevent this by knowing ahead of time when the due date is for our payments and try to pay in advance.If your payments are made on time consistently, many companies will increase your credit limit or return your deposit with interest.
Alisdair Cosgrove has been writing credit card articles for many years and can find more of his work at the UK site TheMoneyStop.co.uk, offering 0% credit cards for UK residents and also a great selection of articles including 'rewards or cash back?' and also 'choosing the right credit card'.