But what is a secured credit card? Why is it considered a bad credit credit card? How does it work? And how can you use it properly? The answers to these questions will be tackled on the next parts of this article.

What are Secured Credit Cards?

Secured credit cards are special types of credit cards. Before you can use this card to pay for your purchases and even bills, you have to come up with an initial deposit first. The initial cash-out actually serves two important functions. First, it acts as the collateral for the use of the credit card. Should the cardholder default on his secured credit card payments, the lender can tap on the initial deposit to settle the unpaid charges. Second, the initial deposit acts as the credit limit for the card. Thus, a cardholder can only spend as much as he deposited on his credit card.

How a Secured Credit Card Works

As was mentioned above, a secured credit card functions just like any other credit card. You can use it wherever credit cards are accepted to buy products and to pay for services.

Still, secured credit cards are unique. This is because they are usually offered to people with bad credit history or no credit at all. Issuers of these cards do not normally require applicants to have good credit rating. Instead, they just require applicants to submit identification documents and fill out application forms. Also, applicants need to pay application fees, processing fees and annual fees for them to get approved for this card.

Because they are usually offered to people with bad credit history, secured credit cards are also called bad credit credit cards.  Now how can you use a bad credit credit card in a proper way? Let us find out how.

Tips on Using a Secured Credit Card Properly

1.    Keep your charges minimal. Your main purpose in getting a credit card for bad credit is to build positive credit history. So avoid using it on large purchases. Instead make use of your secured credit card in making small purchases that you can pay off right away.

2.    Employ good credit habits. Remember to pay all your charges in full and on-time every month. This will not just help you avoid debt build-up. Doing this will also help you improve your credit history. By managing your credit card properly, you can be assured of regaining credit worthiness.

3.    Use your card to qualify for unsecured credit cards. People usually take secured credit cards to get approved for unsecured credit cards in the future. This is because lenders usually look at how you managed your credit card for bad credit as basis for being eligible for unsecured credit card programs. If you pay your credit charges on time for a whole year or two, lenders will see you as a qualified holder of an unsecured credit card.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Myth No. 1:  It’s okay to apply for a credit card; you can always back out by not calling the activation number.

Have you applied for a credit card and yet changed your mind later on and decided not to keep it?  If you think that not activating the card will protect your credit score, you’re mistaken. Take note that the moment you send your credit card application, credit inquiry will be instantly made which can affect your credit rating.

If you want to use the credit card to pay a bill, you will need to call the activation number.  However, once your application has been approved, the account will automatically be reflected in your credit report whether you call the activation number or not.  Bottom line?  Don’t apply for a credit card is you’re not sure whether or not you want to keep it.

Myth No. 2: You cannot do anything about unsolicited credit card offers.

There is something you can do to cut down unsolicited mails from credit card issuers.  Call 1-888-5-OPT-OUT to “opt out” which means your contact details will be removed from marketing lists that are sold to credit card companies.

Myth No. 3: You can buy anything you want if you get a card with “no preset spending limits.”

Not exactly.   Some people are made to believe that their credit cards literally have “no preset spending limits” which means they can charge as much as they want to their card.  But the fact is that all credit cards have a limit except that some issuers allow their customers to exceed depending on the cardholder’s income and payment history.  If you are earning minimum wage, don’t expect your borrowing limit to stretch too high.

Myth No. 4: Paying your full balance on time is all that matters.

Aside from timely payment, it’s also important to watch your credit limit usage.  Financial experts recommend not exceeding 50% of your available credit no matter how low the interest rate is.

Myth No. 5:   All reward credit cards are rewarding.

From afar, all reward credit cards may seem to give the best offer.  It is only after you take a closer look at the complete Terms and Conditions that you can see the real deal.  More importantly, choosing the right reward credit card depends on your spending and lifestyle.  Remember, what is ideal for one person may not be the same for you.  To really get rewarded, you must be able to pick the right reward credit card and handle it responsibly.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit card and prepaid cell phone services can save you big money!

The DO’s:

Do pay on time. If you want to use a credit card, be sure that you can pay on time. Keep in mind that timely payment is the only way you can avoid additional finance charges.

DO charge only what you can pay. Before using your credit card for any transaction, check your due date of payment. Will you be able to pay your complete balance on time? How do you plan to pay off that particular purchase?

DO pay your full balance. Instead of submitting only the minimum monthly due, leaving it’s best to pay your full balance to avoid interest rate fees and protect your personal credit.

DO check your monthly bill. Do you review monthly billing statements from your credit card issuer? Before posting your payment, make sure that all charges in your account are accurate. If you do not receive your bill on time, call up your Issuer immediately and ask for an update.

The Don’ts:

Don’t maximize your limit. To be safe from bad credit, it’s best to keep your charges minimal. Ideally, do not use more than 50% of your available credit. By doing so, you can make a good impression to potential creditors to whom you have sent applications to.

Don’t carry all your cards in your wallet. If you own a number of credit cards, it’s best not to bring them all, especially if you plan to shop. Having too many credit cards that you can use may only encourage overspending. In addition, you will have a hard time calling up each credit card company in case your wallet gets lost or stolen.

Don’t close old cards. Be careful about closing out your oldest credit card accounts as doing so would mean erasing the oldest parts of your personal credit history. If you have a new credit card with a better rate, you can still keep your old credit card active by using it exclusively for small purchases.

Don’t transfer huge balances into one card. Transferring balances to a zero interest credit card is a good strategy but you need to make sure that you are not maximizing the cards’ credit limit. Remember that maximizing your limit can pull down your credit score.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Still a lot of people are hesitant to use credit cards. If you belong to this set of people, who do not have credit history, allow us to provide reasons why you need to secure your own credit card for no credit history, otherwise known as secured credit cards.

Reason 1: Transactional Requirements

We cannot deny the fact that a lot of shops and business establishments today require people to use credit cards. Airlines, car rental services, hotels and even online shops transact with their customers using credit cards.

These business establishments require their customers to provide their credit card numbers, despite the fact that these customers are very much capable of paying for their reservations and purchases in cash. So, in order for you to enjoy the services and products of these commercial shops, you need to have your own secured credit card.

Actually it is relatively easy to get credit cards for no credit history or secured credit cards. An applicant just needs to open an account, deposit a minimum of $300 to that account, process the necessary documents for an application for secured cards, pay the processing and administrative fees, and soon he or she could enjoy the benefits of using his or her own credit card.

Reason 2: Need to Build Credit History.

Of course, it is not safe to assume that you wouldn’t need credit in the very near future. Domestic emergencies and other immediate needs may soon require you to request for credit lines from lending firms and banks. But if you do not have any credit history, most of these firms will shy away from extending you credit.

So you might as well get a secured credit card today, make purchases, and ensure that you pay off each monthly charge. This will help you establish your credibility as a debtor with excellent credit ratings, and eventually you will find banks and lending firms eager to extend you credit.

Of course these are but two of the reasons why you need to apply immediately for secured credit cards. But we hope that through the reasons enumerated above, you now realize the importance of securing your very own credit card.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Eventually these individuals find it hard to resist using their credit cards to finance their online purchases, and travel charges. Soon, they accumulate so much debt that will prove to be very difficult to settle.

So if you believe in the premise that you need to control and discipline yourself to stick only with whatever finances you have, but still you would like to keep a handy plastic card; then, you might as well apply for prepaid debit cards. What are these cards for? The answer is provided below.

Prepaid debit cards are excellent tools to give people the flexibility to make purchases without the threat of accumulating large debts. The reason behind this is that this debit card requires a fund to be ‘loaded’ or transferred to it, before a cardholder could use it for making purchases or settling monthly bills.

These reloadable prepaid cards function in the same manner as prepaid mobile services; you only get to enjoy sending messages and calling up your friends as long as there is available credit on your mobile phone. By using these debit cards, people will surely live and stick to the budget they have set, without encountering any credit entanglements.

Another good thing about most prepaid debit cards is that they do not charge interest rates on purchases. (some debit cards DO charge fees on declined transactions)

A lot of other cards today impose a large number of fees to their clients, especially when their clients encounter declined purchases. But for these reloadable prepaid cards, cardholders need not worry about additional interest rates and late penalty charges.

Other features of prepaid debit cards include, relatively easy approval of card application, and online monitoring of the expenses and purchases charged on the debit card. These features prove to be helpful in convincing more people to get their own prepaid debit cards so that they could also reap the benefits that these cards could offer.

So, apply now for these debit cards and soon you will realize the value of living only within your means.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Prepaid Credit or Debit Cards for Everyone

Issuers of prepaid debit cards give everyone the chance to use plastic money without going through a complicated approval process. Unlike standard credit cards that require good credit history, credit check is not necessary to get a debit card. All that is required is an advanced deposit which will be used for payment.

Just like a regular credit card – you can use it when buying groceries, shopping at malls, paying utility bills, or purchasing from online stores. As long as you have available funds in your account, you can use it to pay for your charges.

Prepaid Debit Card Limits

What makes a prepaid card different from a real credit card? First, we must understand that a debit account does not come with a credit line. Each time a debit card is used for payment, charges are instantly paid off using the deposit in the cardholder’s account.

For instance, if you have made a $300 deposit, you can only use your debit card for charges up to $300. If you want to continue using it for more, you must make a new deposit in your account.

Prepaid Debit Card Advantages

Generally, prepaid debit cards are accepted anywhere credit cards are accepted. Most merchants allow both credit and debit card payments. This is especially true if your prepaid card bears the Visa or MasterCard logo.

Prepaid debit cards are great for people who are often on the road or on trips abroad. Instead of bringing a large amount of cash, they can use a debit card for most of their travel expenses. Students can also benefit from prepaid debit cards since it prevents them from incurring bad debt. For parents, they can conveniently send cash to their kids through their prepaid accounts. Even employers who hire home based employees or freelancers can use a prepaid debit card to send wages or service fees.

Although some people may frown at the thought of not being extended a credit line, those who want to control their spending will find this limitation as a blessing. And because you are not allowed to go over your limit or to pay at a later time, extra fees such as interest rate, overdraft fees, late penalty fees, and other credit card surcharges are completely eliminated.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Important Factors that Must Influence Your Decision

First, you need to know the factors to look for from a prepaid credit card.  For instance, you need to find a prepaid card that is supported by a major issuer or processing service.  This way, you can be sure that you can use your card for payment or purchases anywhere you are.

Ideally, you want to go with a card that has a Visa or MasterCard logo.  Amex is another popular name in credit cards but there are more merchants and establishments that accept Visa and MasterCard payments.

It is also crucial to make sure that your chosen card imposes no hidden fees or unreasonable costs.  Pre paid credit cards are great because you won’t be charged with interest rates or late penalty fees.  However, prepaid cards do charge a transaction fee each time you swipe the card for payment.  If you’re not careful, you could end up with a credit card that imposes expensive fees.

Check online for prepaid credit card reviews from finance groups and cardholders.  People who have personally used the card often share their views by posting articles or comments on blogs, forums and social community group discussions.

There are prepaid debit cards that also offer rewards.  You may be awarded points each time you use your prepaid card to pay your bills or make purchases.  Points may be equivalent to available credit in your account or may be exchange for merchandise.  If you can find a prepaid card with reward offers, then surely it’s worth considering.

Other factors that you should check on are prepaid credit card features.  Does it allow online banking?  Can you access your account online?  Does it offer 24/7 customer service?  Does it offer fraud protection?

Lastly, you want to choose the issuer that provides credit reporting to the major credit bureaus.  In the past, prepaid credit cards do not report payments to the bureaus so they cannot be used for building credit history.  Today however, there are prepaid credit card issuers that do offer this service.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Incentives

There are some that offer extra load when you refer a friend to apply to the same debit card company.

Easy application process

Everybody who wishes to apply can be legible, even those with poor credit history are entitled to apply. No background check, employment verification nor credit history check to undergo. The application procedure is lax unlike from credit card because their basis is on the money that will be deposited, so the approval is assured.

Security

Entering a credit card number on the internet can be very uncomfortable. Using a prepaid card is a lot safer because aside from already been accepted as a mode of payment online, the crooks can only get the value that has been loaded on the card. You feel secured using the prepaid card whether online or in person.

Better than cash

Bringing huge amount of cash in malls or anywhere can be uneasy. It can also be too enticing for those who have bad intentions, if they see that you’re bringing all those cash in hand. Another thing is that if your cash is lost, then it can no longer be returned back to you. But if you’re debit card gets misplaced or lost, you can still replace a new card.

Convenience

Debit cards, like credit cards, have been widely accepted anywhere: malls, grocery stores, online, restaurants and gasoline stations. You can also pay (either online or by phone) your bills such as utility bills, phone bills and other bills that you have to make. In some cases, they more accepted than credit cards.

Controlled spending

Spending is more controlled with a prepaid card because it depends on how much is the load. Compared from bringing cash, it is also easier to keep track the money when your card is used. If it’s already empty when you’re about to make payments, the transaction gets automatically declined.

Develop financial responsibility and discipline

It teaches how to use and handle money responsibly. When doing purchases on the internet, it is easier to track where the money was spent. You can see the transaction history online and you can also do it by phone. So, you can be sure that you won’t lead into any kind of debts. Overspending is impossible to be experience with prepaid debit cards because of the limited balance. This certainly is a skill that can be developed with debit card and not with credit card.

The procedure when purchasing is almost same as using a credit card. Once you’re at the cashier, you hand your card to the clerk, sometimes they ask you to sign on the receipt, then your card and the receipt is given to you. Then, you’re done. This card when used for purchasing,is not as risky as a credit card and the process of application isn’t that complication.

Sponsored by:

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Having poor credit rating raises doubts to your capacity to pay debts. Naturally, credit card companies are looking for those who can pay off their debts on time and with a great credit history to prove it.

Sponsored by:

Good thing, those who have poor credit rating may apply for prepaid credit cards. There is no background check or credit check conducted upon review of your application. The application procedure is a lot more convenient than applying for a credit card. Issuers of prepaid debit cards does not care about your credit standing. In fact, a prepaid card can be used to rebuild a bad credit. How can that be possible?

Prepaid Debit Cards and Bad Credit

Today, you can have a debit card that does payment reporting to the three major credit bureaus. Thus, as you use your prepaid card for purchases, you are also improving your credit rating.

You can go online and do research on various prepaid credit cards advertised in the market. Compare different debit cards before making a choice. Consider these important pointers:

• go for one that best suits you and your needs
• go for those that report to the major credit bureaus
• go for the one with reasonable fees

Owning a debit card can be a great way to control your spending. Set a specific budget each month and stick with the plan. Before using your debit card, check your available balance and carefully consider whether you really want to spend it for that particular purchase or save it for more important buys.

Unlike credit cards that allow you to shop now and pay later, you can only use your prepaid debit card if there are available funds in your account. This limitation prevents debit cardholders from damaging their credit or getting stuck in bad debt. Also, there is no need to think about over-the-limit charges, over draft fees, late charges, and interest rates.

Yes, you can apply for a debit card to rebuild your credit rating one step at a time. Once you have proved your credit worthiness, that’s the time you can apply for a regular credit card with good rates.

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!

Sponsored by:

The pros of using a pre paid credit cards:

• Using this kind of card enables you to make purchases without cash. However, it reduces the risk of overspending because the limit depends on the amount of money deposited in the account.

• This card can be used worldwide so if you are a frequent traveler, a prepaid card is safer to carry than cash.

• There is no need to pay credit card bills.

• The procedure for the prepaid debit card application is not as complicated as when applying for a credit card.

• There are no interest fees involved.

• Prepaid cards are can be recommended for those with bad credit history. It can be used to improve a poor credit score.

• Unlike a credit card in which you can swipe now and pay later, you can only use your prepaid debit card after making a deposit in your account. Thus, it helps the cardholder exercise control over his/her spending.

The cons of using a pre paid credit cards:

• You cannot use your pre paid credit cards for payments unless you have existing funds in your account.

• The setup fee for this kind of card can be quite costly.

• There are fees involved for each transaction. Each time you use your prepaid card for payment, you are charged with an additional fee for processing the payment.

• Some prepaid card companies charge certain that can increase over time.

• Not all issuers provide credit reporting to the major credit bureaus.

Sponsored by:

About the Author

Tara Tiemann is a credit analyst of Go-prepaid.com and has been a resource site for people who want to live debt free! If your on a budget using prepaid debit cards, pre paid credit cards and prepaid cell phone service can save you big money!