What do you do if you have poor credit or you don’t have a bank account? These items are needed for many important transactions, such as making hotel reservations or online purchases. If you have poor credit, you will be turned down quite often for loans, and any loan you receive will have a high interest rate. In a world where money transactions are primarily done electronically, it is crucial to have some sort of plastic. If you’re trying plastic for the first time, you may try getting a prepaid credit card.
A prepaid credit card is much safer than a regular unsecured credit card. You might have heard the term “secured credit card,” and, while the two names are often used interchangeably, they are not the same. They both entail actual money placed in a prepaid credit card account. To get one, you deposit an amount of money, and you can then use the card to make similar transactions as a regular credit card. On a prepaid credit card, there are no interest charges or late fees, and you will also get a monthly statement, but not a bill; therefore, a prepaid credit card is more closely related to a debit card linked to a checking account. With a secured credit card, however, you will have monthly payments, as well as interest charged on any outstanding balance.
Most prepaid credit cards will come with a small set-up fee, and some may also have transaction fees when you make purchases. There may also be fees of a couple dollars each if you use your prepaid credit card at an ATM or when you deposit more money onto the account. One specific card, the “Mango MasterCard” prepaid card, will waive its monthly fee if you deposit at least $500 per month. Some other cards, like the Green Dot MasterCard, will waive fees if you make a specific number of purchases per month. You may be able to find some cards without these fees, so shop around before getting one.
Anyone can get a prepaid credit card, but it will not actually help to improve your credit rating. A secured credit card will do the trick, so if you’re trying to get better scores from Equifax, Experian, and TransUnion, go after a secured credit card. A prepaid credit card appears to be a combination of a debit card and a credit card. It simply acts as an alternative during certain purchases where a debit card might not be accepted, like hotel or flight bookings. While a prepaid credit card may not be able to improve your credit score, it may be a way for you to learn how to manage your funds electronically, and it can be a good introduction into the hybrid world of cash and plastic.