Prepaid Cards Versus Bad Credit Credit Cards
If you have bad credit, you know how difficult it can be to get a loan or to get your credit back on track. Unfortunately, having bad credit generally results in paying higher interest rates with less favorable repayment terms. Luckily, you can start rebuilding your credit with the help of a credit card that specializes in people like you.
Types of Credit Cards for People with Bad Credit
For people with bad credit, there are basically two types of credit cards to select from. You can opt for a prepaid credit card, which is one that you send money to before making purchases with the card, or you can apply for a traditional credit card that is geared specifically toward individuals with poor credit. Each of these options has its own pros and cons that must be explored before making a final decision.
The Pros and Cons of a Prepaid Credit Card
Prepaid credit cards can go a long way toward rebuilding your tarnished credit if the credit card company makes reports to the credit bureaus. Unfortunately, these cards can be quite costly to open and to maintain. Often, there are start up fees and processing fees associated with opening one of these accounts. Many also have annual fees and, when you send money to the card in order to load it, you usually are charged additional fees. All of these costs can add up rather quickly.
On the plus side, prepaid credit cards can provide a means of rebuilding credit that may otherwise be unavailable to people with terrible credit. In addition, since you are limited to spending only the amount that you have preloaded onto the card, you don’t have to worry about digging yourself into a deep debt that you will be unable to overcome. Nonetheless, you still receive all of the conveniences that credit cards offer since prepaid credit cards are accepted at all of the same places as traditional credit cards.
The Pros and Cons of Credit Cards for People with Bad Credit
Credit cards that are designed specifically for people with bad credit also offer their own set of pros and cons. One pro is that, unless your credit is simply beyond repair, you are very likely to be approved for one of these cards because they are designed for those with bad credit. Therefore, you do not have to go through the hassles of applying only to be denied credit.
Another pro of credit cards designed for those with bad credit is the fact that you actually receive a line of credit that can be borrowed from ahead of time. Therefore, if you are in a tight financial situation, one of these credit cards can help you get through. At the same time, this pro can be viewed as a con if you are someone that struggles with keeping your spending under control. If this sounds like you, it might be better for you to opt for a prepaid card in order to avoid getting yourself into further debt and only worsening your credit problems.