Prepaid Credit Cards
These cards are basically debit cards in a different form. With these cards, your credit limit is determined by the amount of money you deposit into the account when you open it. Technically, the financial institution does not issue you any credit because it is your money from the start. When you make purchases, the money is debited from the funds you originally put on the card. Once you run out of funds, you cannot use your card until you reload the card, meaning you deposit funds into the account. The advantages of this card are that you do not have to deal with monthly bills, and you can never go over your deposit amount (or spending limit), as the card will not work. On the other hand, there are also several disadvantages to prepaid credit cards. For one, these cards typically cannot be used to rent cars or reserve hotel rooms. They also will not help reestablish your credit because banks don’t report these cards to credit bureaus, since no credit has really been issued.
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