Having a strong credit rating is one of the most significant aspects of overall financial health. Without a good credit history, a consumer may be unable to get a mortgage loan, auto loan, small business loan, personal loan, or even a credit card. Fortunately for many people with bad credit, there is another option for getting a credit card even if they have a very bad credit score. Prepaid credit cards are an excellent way of getting a credit card with bad credit.
A prepaid credit card is a credit card which is serviced by a normal credit card servicer, but instead of having a credit limit provided by a creditor or retailer, the credit limit is funded by the prepaid card user. The user normally writes a check to the credit card servicer prior to the card being funded. Once the account is funded, the credit limit is normally between 90% and 100% of the amount funded.
Prepaid cards have many advantages over normal credit cards. One advantage of prepaid cards is that they have a user provided limit, so it is impossible to get into credit card debt. This also prevents excessive interest fees and late fees, which will further tamper the users credit rating.
Another advantage of prepaid cards is that they build a users credit history. Just like with a normal credit card, a servicer of a prepaid card will often report the timeliness of payments and outstanding credit balance to all three credit bureaus. After making a few timely payments, a strong credit history will begin to be built at which point the user make qualify for normal credit cards or installment loans.
Prepaid cards can be received from a variety of sources. Many traditional banks and credit card companies offer prepaid cards to their customers. Other sources of prepaid cards include department stores and other retailers who hope the owner of the prepaid card will shop more frequently at their store. Since the card is prepaid, the application process is simple and approval is guaranteed.
For more information about prepaid cards, visit Money 411 by going to the AccountNow website at www.accountnow.com. AccountNow is a leading provider of prepaid MasterCard and prepaid Visa cards.
