Finance & Loans
Secure credit card v Prepaid credit card
October 30, 2011 by creative · Leave a Comment
They both appear to be the same as they both need funds to be deposited before they can be used. But there are many differences between the two and each will be suited to people with different needs. So what are the key differences between the two?
A secure credit card requires a deposit to be made as security . Your credit limit will be determined on the amount of the deposit with the limit usually being a little over the value of the deposit. You pay your bills after making the purchases as you would with a regular credit card. These report to the major credit bureaus, therefore if you are seeking to rebuild your credit history this is a good option.
If you are not disciplined you can exceed the credit limit and if unable to pay back on time, will adversely affect your credit score.
A prepaid credit card requires a deposit to be made and you can make purchases against that amount. This will prevent you from over spending since you are spending your own money, therefore reducing the risk of debt. But these do not report to the credit bureaus and thereby not suitable for building up your credit score.
