For people with bad credit or no credit, the idea of obtaining an unsecured credit card may seem farfetched.
Fortunately, you have options. For example, a prepaid credit card may be just what you’re looking for.
As the name implies, a prepaid credit card is one that’s secured with a prepayment. Since you’re offering a prepayment to the issuer, there’s no risk on their end. They have the legal right to keep your prepayment should you default on your account.
How to Obtain a Prepaid Credit Card
If you like the idea of using a prepaid credit card, the process begins with an online search. You’ll come across hundreds of options, so give yourself enough time to compare the pros and cons of each one.
Just the same as an unsecured credit card, you’re required to complete an application for a prepaid credit card. It’s here that you’ll share personal information, such as your name and social security number, along with financial details, including your employment status and annual income.
If your application is approved, you’ll receive the binding terms and conditions from the issuer. From there, if you want to use the card, you’re required to make a prepayment.
Keep in mind that the amount of money you prepay is also used as your credit limit.
The Benefits of a Prepaid Credit Card
Even if you don’t consider a prepaid credit card ideal, it doesn’t mean you should turn a blind eye. It could be just what you need to improve your finances and eventually reach your goal of obtaining an unsecured credit card.
Check out these benefits:
- Hundreds of options to choose from: Many banks and credit unions offer prepaid credit cards, so you shouldn’t have any problem finding one that suits your situation. Talk to your bank about any options that they have available.
- Easier to obtain than an unsecured credit card: If you have bad credit or no credit, you may be wasting your time by searching for and applying for an unsecured credit card. But when you turn your attention to a prepaid credit card, you’ll find that it’s easier to receive an approval.
- Build your credit score: In addition to the convenience of having a credit card at your disposal, a prepaid credit card allows you to build your credit score. Just make sure the issuer reports all account activity to the three major credit bureaus.
Now that you better understand the ins and outs of prepaid credit cards, you can decide if this is the right financial tool for you.
Search online for available offers, compare the details, and make a final decision based on your findings.
A prepaid credit card could be just what you need to improve your finances and eventually realize your goal of obtaining an unsecured credit card.