Prepaid Credit Cards...a Killer to those Wishing To Repair Damaged Credit Score

When prepaid credit cards first hit the market, they were they were pitched as good options for those who could not qualify for credit cards. However, these prepaid credit cards are actually debit cards because they do not carry credit limit. You can only use what is loaded on the debit card and no more and therefore it does not provide credit facilities like you would find with credit cards. If you have less-than-stellar credit, it means that the first priority is building the score. This cannot be achieved with prepaid debit cards because they do not offer credit and no payments are reported to credit reporting agencies. 

If your credit is bad, you should work on bringing it to better levels so that you have access to regular credit cards, low interest personal loans and other credit facilities. A secured credit card can help you raise your score and the good thing with this card is that it is accessible to anyone with good or bad credit. What you need to do is look for some money to put as deposit against the card. That deposit acts as the collateral or security against the credit on that card.

Secured credit cards attract low interest rates and can help you push up your score to a better higher point. The deposit you place against the secured card is not used and only remains on the account until you close your account. The reason why prepaid cards are killer to those focussing on bringing up their credit score is because they cost the card holder a lot of money in terms of fees. If you check the monthly fees charged by prepaid cards, they are far way above the fees for bad credit secured credit cards even those, which attract annual fees.

For example, if you acquire American express prepaid card, and you reload the card and use it in the ATM two times each month, you are likely to pay a cost of about $11.90 per month. This comes from the card loading fee of $9.90 and the ATM fees of $2. An ideal secured card can cost you about $4 to $6.5 per month. This means that at the end of the year, you can save a lot of money with secured credit cards.

A prepaid debit card only adds more burden to your spending because of the fees. Although consumers say that they do not worry about the fees, this cannot be overlooked because it contributes to the state of indebtedness. The prepaid card does not allow you to enjoy credit facilities. It cannot help you rebuild your bad score and it will cost you more in monthly fees. 

Perhaps a prepaid card is not designed for people who are truly working hard to have their score push upwards. Prepaid debit cards are known to help those with lose money-spending morals and who cannot hold money in their accounts. You can use these cards to put a gauge on your spending patterns and habits. You only load what you want to spend in specific time and after spending what is on the card, no credit. You must reload your prepaid debit card again.