How do prepaid credit cards work?
Prepaid cards are similar to normal credit cards and are acceptable at every place where you can use normal credit cards. However, prepaid cards work more like debit cards than normal credit cards. To use prepaid cards, you need to add money to the card first. The amount of your spending will be deducted from your prepaid card balance. Your available balance reduces with the number of purchases you make with your card.
For example, if you add $500 onto your card and you pay $300 to book a hotel then you will have $200 to spend. Once you max out your card, you have to add more money to your prepaid credit card before using it again.
Managing this type of card is similar to handling your savings account. However it allows you to build create and you don’t have to worry about interest, finance charges, due dates, late payments, minimum required balance, or revolving balance.
Do these cards help rebuild your credit score
If you want to apply for this type of card, you don’t have to worry about your credit history. Just like secured credit cards, you can get prepaid cards regardless of your credit score. Card issuers don’t check your credit history as you’re not borrowing money from them. However, using a prepaid credit card won’t help you build or improve your credit. If you want to build or improve your credit score it is better to get a secured credit card . Secured cards allow you to build a good credit history or fix your bad credit score. This is important if you are looking to buy a house, get a good job and improve your life.
Best Prepaid Cards
Here are some of the best prepaid credit cards that you can apply for:
- American Express Serve
- KAIKU Visa Card
- AccountNow Visa Card
- PayPal™ Prepaid MasterCard
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