5 Reasons Why a Secured Visa Credit Card is Better Than Prepaid

Many people assume that a prepaid Visa card is the same
thing as a secured Visa credit card. This actually couldn't
be further from the truth. A prepaid Visa credit card is
significantly different from a secured Visa credit card.
Here are five reasons why.

1. The Credit Factor

If you're trying to decide between a prepaid credit card or
a secured Visa credit card, chances are that your credit
isn't exactly spotless. If you want to improve your credit
rating, understanding the differences between prepaid cards
and secured cards is critical.

If you opt for a prepaid credit card, you're not doing
anything to improve your credit rating. This is because
prepaid credit cards typically aren't reported to the
credit bureaus. On the other hand, when you are issued a
secured Visa credit card, your account activity is reported
to the credit bureaus, improving your credit.

By managing your secured Visa credit card properly, you
aren't just gaining access to a credit card and the
benefits that go along with carrying one, but you're also
increasing your credit score and rebuilding your credit
history.

2. The Money Factor

There is one thing that prepaid credit cards and secured
credit cards have in common. Whether you open a secured
credit card or a prepaid credit card, you're going to have
to send in money. That, however, is where the similarity
ends.

When you give money to a prepaid credit card company, they
credit the amount to your prepaid card and then you can
spend the money you've put on it. That's it -- end of
story. When all the money is spent, you either add more or
throw the card away.

When you send in money to open your secured Visa credit
card account, the money is put into a savings account and
you earn interest on that account. Then the credit card
company extends you a revolving line of credit equal to the
amount of that account.

3. Monthly Statements

When it comes to a prepaid credit card, there aren't
monthly statements to pay. With a secured Visa credit card,
however, you receive a monthly statement that must be paid
on time (or it will affect your credit). You will have the
choice of paying the minimum amount due, the balance in
full or anything in between. This activity is then reported
to the credit bureaus.

4. Hotels and Cars

Nowadays when you check into a hotel they ask you whether
or not you are using a prepaid credit card and many hotels
and car rental companies won't even accept prepaid credit
cards as a form of payment. However, there is nothing
differentiating an unsecured credit card from a secured
Visa credit card, which means you can use your secured card
to book hotels and car rentals without any hassle.

5. Moving Forward

If you carry a prepaid credit card, there will never be a
chance of it evolving to an unsecured credit card. However,
it is not uncommon for a secured Visa credit card to evolve
into an unsecured credit card once you have established a
payment history and have proven that you can be trusted
with the card.

So while a prepaid credit card may look a bit like a
secured Visa credit card, the fact remains that they are
very different in many ways. If you want to rebuild your
credit, then a secured Visa credit card is really the only
way to go.

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