In this episode of
Money Creation Explained we are going to cover Do Prepaid
Credit Cards Help to Build or Rebuild Credit?
Prepaid credit cards work a lot like a gift card and acts as
a cash substitute. The user determines the amount of funds
that they want, and buys the prepaid credit card with that
amount stored (For example $50, or $100). The user can also
buy a reloadable prepaid card where they can add more funds
to it as needed. Users cannot fall into debt or an overdraft
like they can with credit or debit cards, because only funds
stored on it can be used. Benefits of Prepaid cards include
the utility of credit and debit cards without setting up an
account with a bank or financial institution. Also, users
cannot spend more then what is on the card so it helps those
worried about over spending.
Prepaid credit cards do have expensive fees to use them such
as a monthly fee even if you do not use the card,
transaction fees every time you use the card, in-network and
out-of-network atm withdrawal fee, cash reload fee,
inactivity fee, and other fees. Some of these fees are
waived if certain conditions are met. In addition, Prepaid
credit card transaction activities do not get reported to
the credit bureaus, so they offer no help in building or
rebuilding the individual’s credit score.
An alternative solution would be Secure Loans which is a
service offered by IOU Notes. It allows users to leverage
their own funds to obtain small loans for personal and
business use as needed and never pay more than 5% interest
per year on those funds. Using our service a user can have a
dependable emergency loan option, help build or rebuild
their credit, budget their money better, and stop paying
high interest fees from other loans. This service was
created because of the need for affordable small loans.
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