The Rise of Prepaid Credit Cards

Financially strapped consumers look for ways to lesson the pain of deep debt, especially during economic downturns. Many consumers may find that credit cards have moved beyond their reach. Prepaid cards may be the solution. Typically marketed to students and those with poor credit, prepaid cards offer the advantages of standard credit cards but without the fear of accumulating more debt or negatively impacting your credit score.

Unlike debit cards, which require a checking account, both prepaid and secured cards are not tied to your bank account. There are no monthly payments because the card, similar to a gift card, has money deposited into an account specifically for this purpose. The spending limit is equal to the amount on deposit.

Network-branded cards bearing the American Express, Visa or MasterCard logo can be used anywhere that traditional credit cards are accepted. Other benefits that may apply include free online monitoring with the option to add additional funds, as well as track your spending.

There are a few things to consider before applying:

• Understand the fees – Many offers come with added costs. Be sure you know if there is an annual or monthly service charge, or ATM fees and how much they will cost you.

• Protection Services – Credit card companies offer purchase protection services. Prepaid cards branded by Visa, MasterCard, Discover, etc. afford a varying degree of rights, including protection from unauthorized charges. Read the account agreement to understand how to return purchases and other important perks.

• Credit History and Score – If you’re hoping to boost your credit score, just remember that transactions made with a prepaid card are not generally reported to the credit reporting bureaus. Ask the issuer if your account activity will be reported to the credit reporting agencies before applying; confirm it afterward by reviewing your credit report by visiting http://www.annualcreditreport.com.

Research comparisons of top credit card deals and apply online. Fill out applications for Visa, MasterCard, American Express, and Discover. Choose the right one for your specific financial needs with helpful tips at http://www.creditcardspi.com.