Prepaid credit cards are self-explanatory, in that you pay before you use it.The bank of the credit card issuer must receive a ?security deposit? of a certain amount to pay for the prepaid card.Most of the time, you will have to pay an amount between $200 and $500 as a security deposit and your credit line is limited to this deposit.



A traditional credit card will have a specific line of credit assigned to it and your approval for the card will be based on you credit rating.When you do not have the required good credit established, the traditional banks will not issue you a credit card.

The closely enforced credit rating requirements may be eliminated on prepaid credit cards and sometimes they may not do a credit check or verify your employment.Since your line of credit is secured by the security deposit, the credit card issuer is covered in case you default on the payments.These cards are secured by the prepaid deposit and this helps to establish credit or rebuild credit for nearly anyone. The requirements may be minimal on these prepaid credit cards and the approval rate is high but you may have to be from 18 to 21 years old or U.S. citizenship may be required.

You can use prepaid credit cards like traditional cards, where ever you use MasterCard or Visa.You can use them online and offline, you can pay bills online and over the phone, and withdraw cash from ATM machines.

Prepaid credit cards offer advantages such as rebuilding credit or establishing credit for the first time and avoiding making late payments.Other advantages to the prepaid credit cards are that your check can be directly deposited onto your card and it will eliminate the need to write money orders and checks and go to the post office.

The prepaid credit cards have disadvantages such as interest rates that are often higher, higher over the limit fees and a monthly maintenance fee.The prepaid credit cards may not be accepted by the car rental agencies and you have to put down a security deposit before the card can be used by you and this can be a disadvantage of prepaid credit cards.

Whether you are rebuilding your credit or establishing credit, it is important that you make your payments on time and that you do not go over your credit limit.The reason prepaid credit cards were introduced was to help us learn how to be responsible for our finances and develop better spending traits.

It is too easy to let ourselves get caught in the late payment cycle and before we are aware of it we are two or three months behind and the fees are mounting up higher and higher.If we know ahead of time when our payments are due to be paid and pay in advance we can prevent this from happening.When payments are made on time, in a consistent manner most card companies will increase your credit line and maybe even return your deposit with interest.