Prepaid Credit and its Affect on Credit Rating

A prepaid card is a great option for people with little or no credit. A prepaid credit card is similar to a credit card only in the fact that it is a piece of plastic you can use to make purchases. Prepaid cards are not attached to your bank account nor do they even have your name engraved on them. Prepaid credit cards are more similar to a gift card than a credit card and will not include any kind of credit reporting. This means that no matter how you use your prepaid card you are not going to affect your credit neither positively nor negatively because there is no reporting to the three major credit bureaus. If you want to build credit you will have to seek a true credit card or a loan from a financial institution.

Prepaid cards are a great option for those who have little control over spending or young adults whom you are not quite ready to trust with a real credit card or your checkbook. Prepaid cards can also save you the hassle of having to keep up with cash bills. Prepaid cards can begin to teach the discipline you will need should you seek a real credit card. The great thing is a prepaid card will not let you use more cash than you have. Once you spend your limit the card will no longer be accepted unlike many debit, check, and credit cards. What this means for you is a better account balance in your bank! Prepaid cards may not be the answer to your credit but may indeed be the answer to your account balance at the local bank.

Should you decide you want more purchasing power you can find a number of different credit cards available providing you have some credit history. Bad credit no longer insures you will not get a credit card but the card may come with higher interest rates and yearly fees. A credit card can be obtained from many sources from pre qualification by mail, visiting websites, or by calling the office of a credit card representative. Be aware that you will not be as limited with a true credit card as you are with a prepaid card. The credit card can and will affect your credit rating. Use it to make responsible purchases and you will see your credit improving use it unwisely and you will see your credit destroyed. Building good credit takes you many responsible years destroying good credit takes you only a few frivolous mistakes.

Prepaid cards have many benefits but of those benefits there are none with help for your credit score. Prepaid cards can be used much like a credit card but will not allow you to go over your cash limit that you have loaded onto the card. Most prepaid cards will allow you to put more cash on them once you have used your cash limit. You may reload them from your bank account or sometimes with a real credit card if you choose to do so. Prepaid cards can make you appear flashy and credit worthy when in fact your purchasing power is no more than a gift card.