If you have a poor credit score you may have been rejected for a credit card application. There are a lot of situations where you need a credit card like reserving a hotel room, car rental, airline ticket, etc. If you need to place an order over the phone you’re going to need a credit card. So what should you do if you don’t have good credit? What if you’re in negative standing in ChexSystems? A prepaid credit card might be a good idea.
When you open a prepaid credit card you need to deposit money just like you would into any sort of bank account. As soon as you’ve deposited money into the account you’re issued a prepaid credit card which can be used anywhere a regular credit card is accepted. You can spend any amount that you put into your account. Once you run out of money in your account you can’t use your card until you refill your account. You don’t get a credit card bill and there’s no interest because it’s all prepaid. It’s similar to using a debit card that’s linked to a checking account.
You do have to pay a setup fee for just about any prepaid credit card. It usually isn’t too large, about $5 to $10 is average. Unfortunately you also have to pay fees every time you deposit money into your prepaid credit card account. If you have bad credit and you need a credit card you’re pretty much stuck with getting a prepaid card.
There is one situation where you might not be able to use your prepaid credit card and that’s recurring subscriptions. Companies don’t like dealing with prepaid credit cards because there’s always a chance someone forgot to load their account with money.
A prepaid credit card isn’t an ideal card but if you have bad credit and you need to have a credit card for whatever reason your options are limited. With a prepaid card you can use your credit card like everyone else and you don’t have bills or interest to worry about. If you’re interested in applying for a prepaid card check out our credit card section.