The Difference Between A "Secured" Card And A "Prepaid" Card:
You’ll get a test question on this in a minute, so listen up!
“Prepaid” cards are generally issued by ripoff companies.
- They generally don’t build your credit.
- They are more like a very expensive "debit" card than a "credit" card.
- They usually have huge fees.
"Secured" cards on the other hand are real "credit" cards, but use your savings to guarantee payment.
- For instance, a good bank might say, "Put $500 in a savings account and leave it there, and we'll issue you a credit card with a $500 limit."
- Generally, most good financial institutions offer "secured" cards.
- Secured cards definitely can help build your credit.
- Most companies that issue secured cards will convert them to "unsecured" cards after they see you pay your bills on time.