Secured And Prepaid Credit Cards Grow In Popularity
I don’t think there is any question that while the U.S. and indeed the world economy continues to to be mired in recession, traditional credit cards will continue to lose ground to prepaid and secured credit cards. Some people refer to them as reloadable credit cards.
These types of cards are designed for and traditionally marketed to consumers that have either poor credit or no credit history at all. But with credit standards tightening it is not hard to see why these types of cards will gain in popularity. The use of credit cards is so ubiquitous for consumers that like to shop online and through catalogs that you really must have one.
Let’s take a look at how they both work.
Prepaid cards are a lot like the gift cards you see in retail stores. They are pre-loaded with your money and you are allowed to spent every penny of that in any way you chose. There are no statements or bills with prepaid credit cards.
Secured credit cards on the other hand, require the user to first deposit funds into an account that is held by the issuer. The cardholder then has the right to tap into those funds as they so choose. Monthly statements are sent out to the account holder.
Prepaid and secured credit cards are different from debit cards in that debit cards require you to link your card to an existing checking account, while secured an prepaid cards do not.
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