One of the best ways to reestablish good credit is to get a pre-paid credit debit card. These cards operate much like a regular Visa or MasterCard, however, the card is secured by a deposit that you make with the lending bank. These cards are known as secured cards, pre-paid cards and sometimes as debit cards. although debit cards are usually attached to a checking or savings account.
Be sure you are clear on the differences between a “pre-paid” credit card, and a “debit” card. The term “pre-paid credit debit card” can be confusing because it can refer to two different types of credit products.
A pre-paid credit card can be set up by anyone with bad credit. It is virtually guaranteed that you will successfully be approved for a prepaid card. In order to open a pre-paid credit card, you deposit a certain amount with the bank, and the bank will issue a line of credit in the same amount as the amount you have deposited with them. In this way, the lending bank is certain to be repaid if you fail to make your monthly payments. In addition, these lenders will report your good payment history to the credit reporting agencies. Your credit improves with good repayment history, and you have a Visa or MasterCard that you can use as you would an unsecured card.
With some bank accounts, you can also qualify for a debit card. This card may say Visa or MasterCard on it, but this is tied to a checking account, and is not normally reported to credit bureaus as a credit card. This card allows you to withdraw money directly from your checking or savings account, and is not the same as a secured credit card.
A secured card operates much like a regular credit card. You receive a monthly statement, on which you have to pay at least the minimum monthly payment. You’ll pay an annual fee, and possibly some other up front charges to apply for the card. These features are different from a debit card.
For an individual with bad credit, a secured card can be much less expensive than applying for unsecured bad credit cards. Be sure you are clear about what product you are looking for when you refer to a pre-paid credit debit card – whether you want a pre-paid card that acts like a traditional credit card, or a debit card that works with your deposit account. A secured card is a great way to begin to rebuild your credit. After a short while, with a one-time payments and a good payment history, an individual with bad credit can begin to see improvement in their credit score.
MF Calhoun writes on credit and debt topics for a variety of publications including the site Fix-It-Yourself-Credit.com. Get a FREE list of pre-paid secured and unsecured credit cards for bad credit at http://www.credit-help-online.com .
AccountNow Prepaid Visa & Prepaid MasterCard cards do not extend credit like credit cards, meaning you can’t spend money you don’t have. Get a Debit MasterCard Today!
Posted in 
