Prepaid or Secured–Is there a difference?

With all the different types of cards out there on the market today, it can be somewhat confusing as to what the differences are. In an effort to help you figure out which type of card will meet your needs, this article explains the difference between a prepaid credit card and a secured credit card. The two are very different but sometime get labeled as one in the same because they both can cater to those with less than perfect credit. It is important to note that you do not have to have bad credit to use either type of card, but if you have had credit issues in the past such cards could be available to you, and even improve your credit.

We here at prepaidcards123.com are pretty fond of prepaid cards and at the end of this article you will find a list of some of the popular prepaid cards available. As the demand for prepaid cards continues we expect that the offers will become more attractive too. Some cards are even offering rewards and special incentives to entice consumers. We hope this article helps you narrow down the type of card that works best for you.

Prepaid Cards
A prepaid credit card can be a great alternative to expensive check cashing stores, interest charges, and bank fees. Most of the prepaid cards available today offer very low fees and even some cards have no fees at all. Prepaid cards generally offer direct deposit of your paycheck and this usually includes government benefit checks like social security and others. This means your funds that you would typically receive in a paper check for is electronically deposited to your prepaid card account. With some cards you can even pay your bills online which is very convenient.

Prepaid cards offer a 100% guaranteed approval because your credit history does not matter. If you have good credit, bad credit, or no credit at all you can still apply and even get approved for a card. The prepaid market is on an upswing and these cards are becoming more and more popular. Many people today are using them as an alternative to a traditional credit card or even a checking account. The fees are much less for prepaid cards and you do not ever get charged overdraft or over the limit fees because you can not go over your limit. This is because your balance is based on whatever deposit you make onto the account. If you deposit $500 into your card then your spending limit is $500. You can not go over it!

Secured Credit Card
A secured credit card is a type of credit card that requires card members to put a deposit onto the account. The amount the cardholder is required to deposit can vary from card to card. In some cases the cardholder must deposit between 100% and 200% of the total amount of credit desired. For example, if a $1000 deposit is made the cardholder would be given a line of credit somewhere between $500 and $1000. Secured credit cards are for people who have had bad credit and can not qualify for a traditional non-secured credit card. Some banks offer secured cards automatically if someone does not qualify for one of their credit cards.

It is not uncommon to see secured cards base the deposit amount on the cardholders credit history. Instead of having a rather high deposit, they might offer a lower deposit as an incentive to the consumer. Once the deposit is made it goes into a FDIC savings account and the card issuer may use the deposit in case of possible account delinquencies. If need be the issuer can use the deposit to cover the charges placed on the account by the cardholder. This way the bank does not lose out if the cardholder does not pay the balance off.

Popular Prepaid Card Offers

The UPside Visa Prepaid Card is known for its low fees and it is one of the first prepaid cards to offer a rewards program for its members. With this card there are many ways you can earn rewards, which UPside calls UPoints, making this definitely a card to consider.

The Green Dot Prepaid MasterCard® is one of the most popular prepaid credit cards, with over 10 million customers. One of the best features of this card is that it offers free ATM withdrawals at over 15,000 locations.

The Mango Money Prepaid MasterCard is one of the newest and least expensive prepaid cards out there today. With a low fee structure this card cost just under $5 a month. This is one of the best values among prepaid card offers today.

The YAP MasterCard Prepaid Card is one of several new low fee prepaid cards. With Yap, you not only get all of the benefits of a prepaid MasterCard, but you also get unique features only offered by YAP, such as the ability to transfer money with your cell phone.

Tagged as: prepaid cards, Secured Cards