Prepaid Credit Cards vs. Secured Credit Cards
March 5th, 2008If you have bad credit and need a credit card for the ease of its use, you may take advantage of either a prepaid credit card or a secured credit card. These types of cards, secured by a deposit, are available for people with bad credit. However, to pick the right card you will have to understand the difference between these two kinds of cards. This table summarizes the differences and similarities of prepaid and secured credit cards.
Pre-paid vs. Secured Cards
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Prepaid | Secured |
| Credit History | Not required | Bad/Fair Credit is Ok |
| Upfront Deposit | Yes | Yes |
| Monthly Payments | Not required | At least minimum payment if used |
| Over Drafting | Not Possible | Will be penalized |
| Reports to Credit Bureaus | No | Yes, helps to build / rebuild credit history |
| Reasons to get | No credit history, but need a card to make purchases where credit cards only are accepted. Do not want to open a credit card or a debit account and do not want to carry around cash. Control spending. | Need a credit card, but bad credit history prohibits getting one. Would like to build or rebuild credit history. Learn the habits associated with maintaining a real credit card account. |
This table reflects most common conditions applicable to pre-paid and secured cards. Each particular issuer may have different regulations and rules. Please check with the issuing company for details of their offer for it may vary from or completely conflict with the information presented on this page.
