Prepaid Debit Cards
The cards listed below are prepaid credit cards that offer guaranteed approval and can be used anywhere Visa and Mastercard are accepted.
Understanding How Prepaid Credit Cards Work
Prepaid credit cards enable consumers with very little credit or a poor credit history to make purchases with a prepaid Visa or MasterCard that functions just like a regular unsecured credit card. These are prepaid debit cards with built-in programs for reporting your credit standing, which can help you establish or rebuild your credit history -- all while avoiding the hassle of late fees, finance charges, and debt.
When you apply for a prepaid credit card, you will be opening an account with the credit card issuer and depositing money into that account. With sufficient funds in your prepaid credit card account, you can then use the card to make purchases just like any other Visa or MasterCard. This makes prepaid credit cards a good choice for young people with no credit, someone with bad credit, or anyone who wants to carry a card with a fixed credit limit rather than cash.
Prepaid debit cards work differently from secured credit cards. With a secured credit card, the deposit you use to create the account remains untouched and you are given a line of credit equivalent to the amount of your deposit. With a prepaid credit card, you are basically spending your own money through plastic rather than cash. The credit limit of your prepaid card will be equal to the amount of money you deposit, but that money will be used up as you make purchases. When the funds in a prepaid credit card account are depleted, the cardholder must deposit additional funds before the account can be used again.
For people with bad credit, prepaid debit cards are a perfect tool to use in repairing your credit score. Nearly all prepaid cards come with a credit builder plan of some sort. What prepaid card issuers do is report your good standing to one or more of the major credit bureaus. This allows you to establish a good record of responsible card use over time. Since you can't actually go into debt with a prepaid credit card, there is very little risk in using them.
Although you never have to worry about late fees or finance charges with a prepaid credit card, there are some additional fees involved. These typically include annual fees, card loading fees, customer service contact fees, and similar costs. Still, the advantages of building your credit history without getting into debt and the ability to make purchases everywhere Visa or MasterCard are accepted make prepaid credit cards very valuable to a lot of people.