What Are Prepaid Credit Cards For?

What Are Prepaid Credit Cards For?

by AJ Adams

Prepaid credit cards are useful tools that are often utilized to improve one's credit. When someone is not able to make their payments on time, or has other financial trouble, their credit can be hit pretty hard. But, a prepaid credit card can help them get back in good standing with lenders. It works essentially the same as a debit card, and only allows you to spend money that you have already got. This will help you avoid many of the pitfalls that have given credit cards notoriety for being financially ruining.

To open a prepaid credit card, you will have to deposit a small fee. The fee is usually between 5 and 10 dollars. After that, you can deposit any amount of money through your bank account. This money is added to the balance of the card. After it has a balance, you can use it just like a normal credit card, to do anything that you would regularly do. Therefore you are given the convenience of a credit card without the temptation to spend more than you actually have.

Your activity on a prepaid credit card is reported to the credit bureau, so over time you can gradually regain your credit to decent standing. With poor credit, if you try to get a regular credit card, you won't be able to find anything with decent terms. You'll have to deal with high APR rates and inflexible deadlines. But if you can improve your credit with a prepaid credit card, you'll be able to get a regular card with terms that you can agree to.

So if you suffer from poor credit, you should look into getting a prepaid credit card. Instead of applying for one with horrible terms and rates, you can use one that will keep you out of debt and start improving your overall credit.

Reward credit cards

Reward credit cards

by Stephanie Wendy

Although credit cards are often seen as bad guys, with high interest, fines for late payment and that nagging temptation to spend little more, disciplined borrowers can earn some great rewards just by taking out the right kind of card.

If you manage to pay off your balance each month, avoiding the interest that the British Banker's Association says 75 per cent of cards carry, you'll find some great rewards for the picking - from cashback to free flights.

What's on offer?

There are three main types of reward credit cards available; loyalty cards, points schemes and airmiles.

Whichever type you go for, remember that you absolutely always have to pay your card off in full at the end of the month. As soon as you start paying interest, you'll simply be paying for those "freebies" you're working towards.

Loyalty cards

These reward credit cards encourage you to spend your money with a certain company - to be loyal to that company. The best type of loyalty card is one that gives you points for things you would be buying anyway such as your weekly supermarket shop.

Cashback

These reward credit cards are great because they give cold, hard cash in return for what you spend - and obviously you can spend it where ever you want. Some have restrictions on how much you can spend but by using it as much as possible, but you could still make as much as five per cent on some of the current best buys.

Airmiles

Because it can take a long time to collect enough points to actually get anywhere, airmiles reward credit cards fell out of fashion for a while. However, a new breed has emerged, some offering bonus points that encourage you to spend more in the first three months, and others that just offer higher returns.

Make reward cards work for you

You have to be 100 per cent disciplined in your finances and never pay interest at the end of the month.

If you think that you might be tempted to run up high bills in order to earn more points without avoiding interest, then don't even consider reward credit cards - try a zero per cent purchases card instead. And if you