Nov
17
The prepaid credit card must be secured by the applicant, by paying for the use of the card before actually using it to make a purchase.The bank of the credit card issuer must receive a “security deposit” of a certain amount from the credit card applicant to pay for the prepaid card.You are required, as a rule, to pay from $200 to $500 as a security deposit and the credit limit on your card will be in line with the prepaid deposit.
If you have applied for any traditional credit cards, you probably were approved or denied based on your rating and if approved, you were issued a credit card that has a specific limit on it’s credit line.When you do not have the necessary good credit rating already established, the traditional banks will not issue you a credit card.
Prepaid credit cards may cut back or even eliminate the strict credit rating requirements, in some cases, they don’t even do a credit check or employment verification.Since your line of credit is secured by the deposited security amount, the credit card issuer is covered in case you default on the payments.This is a simple way for people to rebuild their credit or establish a credit rating for the first time, and because these cards are secured by your deposit, almost anyone is eligible to receive one.There may be age restrictions (18 or 21) on these prepaid credit cards or you may have to be a U.S. citizen, but these instant credit approval cards have a high approval rate because the restrictions are minimal.
Prepaid credit cards can be used just as you would use traditional credit cards, anywhere that VISA and MasterCard is accepted these cards can be used with ease.These prepaid credit cards can be used to pay bills online or on the phone or to access cash from an ATM machine for any purpose or they can be used to do online and offline shopping.
Prepaid credit cards can help establish or rebuild reasonable credit ratings and keep payments from falling into default.Other advantages of the prepaid credit cards are the elimination of the need to write checks and money orders and make trips to the post office to pay monthly bills, and your paycheck could be deposited directly onto your card.
The prepaid credit cards also have some real disadvantages connected to them, such as interest rates that are often higher, over the limit fees of a higher amount and a monthly maintenance fee.Other disadvantages of prepaid credit cards are the necessity of paying security deposits which must be put down before you can use the card and the reality that these cards sometimes will not be accepted by car rental agencies.
If you are trying to rebuild your credit rating or establish one for the first time, you must be on time with your payments and be absolutely sure you do not exceed the limits of your credit line.The main reason prepaid credit cards were introduced to the public was to help us learn how to be responsible in our financial matters and develop better spending traits.
It can be too easy to get caught up in the late payment trap and before you know it, you are 60 to 90 days behind and the fees are continuing to add up.By continuing to make a consistent effort to pay your payments on time, most companies may return your deposit with interest andor increase your credit line.
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