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Prepaid Credit Cards that Rebuild Bad Credit History

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Published: 24Dec2009
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People get a credit card not just to enjoy convenience in paying their bills but to build credit history as well. In fact, maintaining at least one or two credit cards can really boost one's credit score. As long as a credit cardholder keeps up with his/her payments, he/she can enjoy good credit.

Unfortunately, some people suffer from bad credit history as a result of credit card mismanagement. Late payments, exceeding credit limit and outstanding balances can really pull down your credit score. Do you find yourself in a similar situation? Do you currently have a low credit score? If yes, what can you do to regain a good standing?

Can A Prepaid Credit Card Help You?

Today, there are issuers of prepaid credit cards that actually report to the major credit reporting agencies. Yes, you can now use a prepaid credit card to rebuild your bad credit history. More importantly, a prepaid card may just be the tool you need to avoid uncontrolled spending and bad debt.

Unlike a credit card, a prepaid card does not come with a credit line. If you want to pay a purchase using this card, you must have existing funds deposited in your account. Let's say for instance that you deposited $500 in your account. That means you can use your prepaid credit card for payment until you reach the $500 value. Afterwards, you must submit a new deposit to continue using your card for payment.

Use the limitations of a prepaid card to your advantage. Not having a credit line can actually be a good thing especially if you're having trouble keeping your spending in control. Since you can't use a prepaid card if you don't have available cash in your account, unplanned purchases can be prevented. You may choose to deposit only a limited amount of cash in your account so you will not be tempted to spend more than you need.

Choose the Right Prepaid Credit Card

When choosing a prepaid card, you want to make sure that it provides credit reporting service to the major credit bureaus. It's easy to spot which cards report to the bureaus by simply looking at the ads. Prepaid issuers will proudly announce that you should pick them because they can help you rebuild bad credit.

Another important factor is the payment system. You don't want a prepaid credit card that does not bear the Visa or the MasterCard logo. Visa and MasterCard are the two leading payment systems that are recognized around the world. If your prepaid card is not supported by Visa or MasterCard, you may have a hard time find merchants that will accept your card for payment.

Finally, take time reading the Terms and Conditions of your chosen prepaid credit card. Make sure that you understand the terms of use and fees involved in maintaining your account. Take note that prepaid cards impose a fee per transaction so you need to be fully aware of the exact costs before signing up.

New Horizon Business Services, Inc NHBS, Inc has been providing consumers and business owners with financing since 1989. Join our mailing list for Free Tips on Rebuilding and Repairing Credit. Click here for the list credit cards for bad credit.

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