Thursday, August 11, 2011

Differentiating Prepaid Credit Cards From Debit: Which Is Better?

We all know about the humble credit card. It's a piece of plastic with a purchasing power. You swipe it once and it feels empowering. Twice, and it can form habits. Three times and it is guilt inducing. Later, you find yourself in despair, because the bill is incredibly expensive. This is what followed the debate on prepaid debit and credit cards. They serve as good alternatives to the regular credit cards. Both offer the feature to prevent people from overspending and at the end of the day also help in improving your credit report.

The prepaid debit is unique because it allows you to use your card to access your money charged to the card. Therefore the money is directly drawn from the money you placed. This is ideal for someone who is not a bank account set up yet or if they have a debt problem. The good thing about this account is that it is not directly connected to a bank that saves you from overdraft charges. The problem with this card, is that they can not help build your credit.

The prepaid credit cards are also known as secured cards. This is protected because you can only use the money you've paid into the account. There is a considerable difference with the debit card as the prepaid credit may be used to make monthly payments. This is so favorable that it helps you to build your credit. If you have no credit or bankruptcy was recently able to use this card to rebuild their credit in a safe and secure manner.

One bad thing about these cards is that you build a very high cost. You may need an annual fee and other charges. Therefore, the conditions of the cards read before agreeing on the use of the cards. Some companies may just use people who have no choice. Choose companies that focus more on your needs more than their own advantages.

If you really want to get credit cards, some companies offer low limit cards and this is advantageous for those who want to build their credit. It is necessary to shop for options and only 1 or 2 cards to choose. Too many cards will be overwhelming to the finances of the individual. Always be wary of your spending activities.



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