Credit Card Solution

The Rise of Prepaid Credit Cards

American consumers look for ways to lesson the pain of a credit crunch and deep debt, especially during economic downturns. Many consumers may find that credit cards have moved beyond their reach. Prepaid cards may be the solution to much needed relief. Typically marketed to students and those with poor credit, prepaid cards offer the advantages of standard credit cards without the fear of accumulating more debt.

Unlike debit cards, which require a checking account, both prepaid and secured cards are not tied to your bank account. There are no monthly payments because the card, similar to a gift card, has money deposited into an account specifically for this purpose. The spending limit is equal to the amount on deposit. Network-branded cards bearing the American Express, Visa or MasterCard logo can be used anywhere that traditional credit cards are accepted.

If you're interested in a prepaid or secured card, there are a few things to consider:

• Understand the fees ' Many prepaid credit card offers include added costs. Be sure you know if there is an annual or monthly service charge, or ATM fees and how much they will cost.
• Protection Services ' Credit card companies offer protection services for purchases made with a credit card. Prepaid cards branded by Visa, MasterCard, Discover, etc. afford a varying degree of rights including protection from unauthorized charges. Read the card agreement to understand how to return purchases made with a prepaid credit card.
• Credit History and Score ' If you're hoping to boost your credit score, just remember that transactions made with a prepaid credit card are not generally reported to the credit reporting bureaus. Secured and unsecured credit cards are reported. Ask the card issuer whether it reports to the credit bureaus before applying; confirm it afterward by reviewing your credit report by visiting www.annualcreditreport.com.

Research comparisons of top credit card deals and apply online. Fill out applications for Visa, MasterCard, American Express, and Discover. Choose the right card for your specific financial needs.