How And Why Prepaid Cards Are Good And Best For Your Business

Prepaid credit cards are also known as secure credit cards. They have some credit limit allotted to them. There is a credit limit based on security of money deposited in the bank. When you make payments through credit cards, you also refund the money with funds from another account. People often go into such solutions due to poor credit. This will however, improve a person’s credit status if the payments have been made in proper and timely manner. In case of untimely payments, the debit card is a more appropriate option. In such cases there will not be any bad credit as the money spent will be deducted automatically from the account. Credit accounts require payments also to be made on time and the credit cards to be used with responsibility. A security credit deposit at the bank makes it easier for people to get credit cards.

How to open a prepaid credit card account

In order to open a credit card account, we must look out for pre paid credit card offers and be able to first find out a company offering the services. Prepaid credit card offers are given out by many companies. Prepaid credit cards require annual fees as well as application fees. The issuing company charges some amount for that but the payment varies widely. First and foremost, customers should research and examine the card and the company they are considering.

If he has any other credit contract he may as well apply with the same. Once the credit card is approved he can set the amount up and pay the security deposit. The deposit is similar to that of the credit limit. Once the account is complete, a plastic credit card is issued to the person that is used like many others. He will find the amount he has been charged for the month on that bill. If he misses paying a month, a penalty will be charged to him. He will be charged a rate of interest if the amount is not paid off at the end of the month with some percentage added to it.

Good and bad credit

People who have a poor credit record will not be approved when they apply for pre paid credit card offers. The borrower has to show that he is a responsible person and he can pay off his financial debts every month. This way he has a chance to build up on his good credits. Thus after many months of payments a secured account is changed to that of an unsecured one.

Some prepaid cards are subject to very high rates of interest and high fees. If the person does not pay off some amount every month the debt will grow. Thus the secured account is riskier and also because when debt is increased the security money is forfeited. It can no longer be accessed by the customer. In some cases on the credit card report of the borrower, the card may be shown as flagged. The other potential creditors would know that that the amount is secure and thus the person might face difficulty in improving the credit. A person with bad credit who is facing such problems will make issues worse. In order to improve the person’s credit rating he has to pay off his pre paid credit card debt, in time, every month.