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SECURED VS PREPAID CREDIT CARDS PART 2

Posted by Percy A Lowe on March 19, 2013 at 7:00 AM

Secured Credit Cards - are credit cards that are specifically designed for people with bad credit. Most people that apply for these types of credit cards do so to build or rebuild their credit. The other advantages are they appear, look and act exactly like a regular credit card. Most prepaid cards are clearly marked as debit cards with outrageous designs and colors.

The price you pay for rebuilding your credit is interest. The worst thing is that you are paying interest on your own money! Unlike prepaid debit cards, secured cards usually carry pretty steep interest rate, usually around 15%. Secured credit cards are not usually "re-loadable". Meaning, once you make your initial deposit this becomes your "credit limit". Your payments will bring down the balance giving you more purchasing power.

Secured credit cards report to the credit bureaus exactly the same way a regular credit card does. Creditors that review your credit for purchases have no idea if your credit card is secured or not. Another thing to watch is that most people will fund their cards with money that they intend to use immediately. Meaning they send in $500 and expect to be able to go out and spend that $500 immediately on receipt of their card. This is not good borrowing practices and will actually bring down your credit score. The best thing to do is use the secured credit card as leverage with your life needs. 

You could best used the secured credit card after creating a monthly budget are spending plan. Note: that the more you can put on the card and successfully use the card and not go over the amount you put on the card is mot effectively. You like to purchase a secured credit card in which you create your own credit limit. You never want no secured credit card issuer to pull your credit to give you a credit limit. 

 

Categories: Credit Education and Restoration

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