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Not everyone can qualify for a credit card. With past credit problems such as bankruptcies, repossessions, or even divorces, some people do not meet the stringent qualifications set forth by credit companies to receive a line of credit. However, there is a way to get your foot in the credit doorway without the best credit history: a prepaid credit card.

Credit Pacific Service Union How does a prepaid credit card work?

Prepaid cards are electronic cards which allow card holders to access funds deposited to an account. A prepaid card can be used to withdraw money or pay for goods and services. Unlike a credit card, which extends a line of credit, prepaid cards are more similar to debit cards. Prepaid card holders can only spend the money they load on the card. Since no credit is extended to prepaid card holders, interest and overdraft fees are avoided.

Credit First Service Union Whether making a last-minute utility payment, completing an online purchase, or reserving a rental car, you can use a prepaid credit card just as you would a standard credit card. Lenders offer prepaid MasterCards or Visa cards that look exactly like the regular cards. Neither you nor the store clerk will be able to tell the difference.

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Card Credit Mobile Service To receive a card, fill out the lender's application and open an account. You are required to deposit a minimum balance to begin your line of credit. After your account is established, you can use your card to charge items up to your balance limit.

Money can be loaded on to your prepaid card by cash, bank transfer or even another credit card, and because it is a Visa or MasterCard you can use it anywhere in the world. Prepaid cards generally have the same uses as a credit card, so much so that they are commonly referred to as ‘prepaid credit cards’. However, there is a difference. A prepaid card is completely powered by your cash and therefore the money you have in your prepaid account is the money you have to spend. This means there is no risk of running into debt. There are no credit checks and no interest to pay. Consequently, rather than referring to it as a prepaid credit card, a better description would be a prepaid debit card, a prepaid Visa card or a prepaid MasterCard.

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Credit Public Service Union · A prepaid credit card is easy to get. It requires no other qualifications other than your down payment. The cards are available online and at several retail stores.
· Your credit limit is completely under your control. You can have as high a limit as you wish, as long as you deposit the cash to meet it.
· With the prepaid card, there are no interest charges or annual fees.
· When you use your card, you aren't accumulating any more debt. In fact, by making your credit card payment on time, you are actually improving your credit rating.
· You can use your prepaid card anywhere they accept MasterCard or Visa cards.

Cash can also be used to load a prepaid card. Money transferring services, such as MoneyGram or Western Union, can be used to load cash onto a prepaid card. Why Use Prepaid Credit Cards There are many benefits of using a prepaid card. For instance, more businesses are requiring credit or debit cards when dealing with their company. Most motels, hotels, car rentals, and airlines require a major credit card to be used when making a reservation. Also, most online shopping is done using a credit or debit card. With a prepaid card, those who normally deal in cash can use their card to secure reservations at various businesses, pay bills electronically and shop online.

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Center Credit Service Union · Prepaid cards can be expensive to establish. A set-up fee of $5 to $50 is charged when you make your opening deposit, and an additional fee is charged every time you add more money to your account. These fees, on top of the money you have to put up to get the card in the first place, can be prohibitive to someone on a tight budget.
· With a standard credit card, you wouldn't be charged a set-up fee or an annual fee. Although, the interest you would be charged on your credit card payment would make up for this in the long run.
· The money you put down in the beginning is often a big deterrent to people in need of a line of credit. However, if you tend to spend over your credit limit, this system of only purchasing what you can afford may be a good way to retrain your spending habits.
· Some service providers will not accept prepaid cards for automatic payments. Check with customer service departments before you make plans to pay with your new card.

Card Credit Service Wireless A prepaid credit card is a great way to build up bad credit. But it's vital that you practice good financial habits along with owning the card. Make your credit card payment on time and in full. Manage your money with a budget and start a small savings account for emergencies. If you use your prepaid card and pay it regularly, you will eventually offset some of the mistakes you made in your financial past.

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