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Prepaid Credit Cards

Prepaid cards function just like credit cards in nearly all aspects, but you have to pay the spending limit up front. It's like a prepaid phone card you can use to buy anything.

The most obvious benefit is that you can't go over your limit. The most obvious down-side is that most prepaid cards require a start-up or activation fee. In general though, they are still excellent cards for those of us that need the convenience of a card - yet still have that pesky 'less than perfect credit'.

Some current examples of prepaid cards are the READYdebit® Card, All-Access® Visa® Prepaid Card, Bank Freedom Prepaid MasterCard®, Baby Phat Visa® RushCard™ Prepaid Card, BuyRIGHT Prepaid MasterCard®, Eufora Preferred Credit Builder Prepaid MasterCard®, Wired Plastic Prepaid Visa® Card.

Pros:

* Typically don't require credit or employment check to apply
* Allows for online shopping (and possibly online bill paying)
* Allows for use of most ATM machines
* Possible reports to the major credit bureaus
* Pre-set limit keeps you from going over the limit
* Peace of mind when traveling, etc. that you have a card as opposed to carrying cash

Cons:

* Possible high start-up/activation fee
* Possible high monthly/annual fees
* Possible nickel and dime you to death with additional fees

Secured Credit Cards

A secured card is much like a debit card. Your credit line is equal to the amount of cash you deposit into the account. So if you make a $500 deposit on your secured card, you'll be able to use the card up to $500 (minus any annual or additional fees the card issue may charge you).

Secured cards typically report your payment transactions to the 3 major credit bureaus, so you have a way to show you are making payments on time. This will result in a higher credit score over time and the ability to eventually get a regular loan or credit card.

Pros:

* Good for rebuilding or establishing credit
* Allows for online shopping (and possibly online bill paying)
* Allows for use of most ATM machines
* Reports to the major credit bureaus
* Pre-set limit keeps you from going over the limit
* Peace of mind when traveling, etc. that you have a card as opposed to carrying cash

Cons:

* Possible high monthly/annual fees
* Possible high interest rate
* Possible nickel and dime you to death with additional fees

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