Do you need a prepaid credit card?

In today's credit-based society, it's hard to get by without a major credit card. Just try renting a car or making a purchase online without one and you'll see what I mean.

But for people with past credit problems, they can be very difficult to get. The answer? Prepaid credit cards.

What are prepaid credit cards?

Many lenders now offer prepaid MasterCards and/or prepaid Visa cards. These cards work exactly like a regular credit card. In fact, neither you or the store will be able to tell you're using a prepaid credit card simply by looking at it or using it.

The concept of prepaid credit cards is really very simple. You open an account and "pre-load" the card with cash up-front, similar to a pre-paid calling card. Then you use your prepaid MasterCard or Visa anywhere these cards are accepted.

Advantages of prepaid credit cards:

- They're extremely easy to get. You can purchase a prepaid credit card online or at many local retail stores with no credit check or income requirements.

All you have to do is fill out a short application, pay a small set-up fee, and load the card with cash (this amount will be your "credit limit").

- There are no interest charges. When you use your prepaid MasterCard or prepaid Visa, you're not borrowing any money. The fact is you're using your own money so you pay no interest!

- Prepaid credit cards can't get you into financial trouble or lead to credit problems, which is probably why you need a prepaid card in the first place. Since you aren't borrowing any money, you can't go into debt.

- You can use them almost anywhere. A prepaid MasterCard or VISA can be used virtually anywhere VISA and MasterCard are accepted.

Disadvantages of prepaid credit cards:

- They're expensive. You'll usually pay a set-up fee (typically $5 - $50) when you first open the account. After that, you'll have to pay a fee of $5 or more each and every time you "load" more money onto the card.

Compare this to today's regular credit cards which rarely charge a set-up fee or annual fees. Of course, not having to pay interest can help offset these charges a bit.

- You have to have cash up front to load the card before you can make a purchase with it. Of course this can actually be considered an advantage depending upon your perspective.

- Some prepaid credit cards cannot be used to make automatically recurring payments, such as a monthly subscription to an online service.

Conclusion

A prepaid credit card can be an excellent solution if you have had past credit problems or have difficulty getting a regular card for some reason. In fact, a prepaid card might be the only solution!

If you decide to get one, compare several offers and select the prepaid credit card that most closely matches your needs and special circumstances.

Explore career opportunities in the Debt and Credit industry
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Your credit report is used extensively in almost every area of your life. When you apply for a credit card, the credit card company reviews your credit report. Apply for an auto loan or mortgage and the lender checks your credit report. Apply for a good paying job and the employer will most likely check your credit profile. Do you recognize a pattern here?

The fact is that a spotless credit report is an absolute must in order to succeed in today's credit driven business climate. Even the simple process of renting an apartment is affected. Most landlords will consult your credit report before agreeing to rent their property to you!

Establishing a great credit profile

If you don't already have good credit, you'll need to establish a good credit rating as soon as possible. The fastest way to do this is to visit a major department store and apply for their in-house credit card. Use the credit card to purchase a couple of small items, say around $50 total.

When you receive the first statement, immediately pay 50% of the balance due. Do not pay the balance in full. When you receive the second credit card statement, immediately pay off the balance owed. The department store will report your responsible use of the credit account to the credit reporting agencies (credit bureaus). Do not use this credit card again!

Now repeat the above process at a different major department store. Again, use you new credit card to make a small purchase. This time, when the first bill arrives, pay off the total amount immediately. As before, do not use this credit card again. Once again, the department store will report your excellent payment habit to the credit bureaus.

Wait a couple of weeks to allow the credit bureaus to create and update your credit reports. This waiting period is crucial to the success of the next step:

Getting a major credit card

The single best thing to have reflected on your credit report is the responsible use of a major credit card. The major credit cards for our purposes are Visa, MasterCard, American Express, and Discover.

Apply for a Visa or MasterCard through a large bank. I recommend starting with Capital One for your first credit card application because they tend to be pretty liberal with their credit decisions. Contact Capital One and ask for a credit card application. Fill it out accurately and completely (be sure to include the account information for your two department store credit cards). Send it in and wait for a reply. Within a couple of weeks you should receive your new Visa or MasterCard in the mail.

When your new credit card arrives, use it to buy a few inexpensive items that you would have to purchase anyway. Gasoline, groceries, clothing, whatever you happen to need. Be careful not to charge too much though. You'll need to be able to pay off the balance within 2 months. Now, put the credit card away and don't use it again.

As before, pay 50% of the balance due right away upon receipt of the first statement. Pay the remaining amount due immediately when you get the next bill. The bank will report your timely payment record to the credit bureaus.

Allow two or three weeks for the credit bureaus to update your credit reports. You now have an exceptional credit rating that you can use to move forward with your financial life. Now, when the landlord, bank, or employer checks your credit report, the answer will most likely be YES!

Need to get out of debt first ? Contact a Certified Debt Arbitrator
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Debt relief is the process of reducing or eliminating the amount of your debt load. Maybe you have trouble keeping all of your payments up to date. Or perhaps you have collection agencies contacting you at work and placing your job at risk.

If so, here are a few debt relief strategies that can help reduce your stress level:

1.Contact your creditors and explain your financial situation, then ask for a reduction in your interest charges, a moratorium on the interest charges, or perhaps an opportunity to skip one or more payments.This type of debt relief request works especially well with credit card companies and consumer loan providers.

2. Apply an extra amount to each monthly payment on your smallest account balance to make a concerted effort to pay it off early. One less bill to pay makes it easier to pay the rest of them.

After the first account is paid off, do the same thing for the next smallest account. If you can handle it, this is the most effective (and preferred) form of debt relief.

3. Sell any unused items that you may have around the house and use the proceeds to pay down your smallest debt(s).

4. If you still have trouble making your monthly payments after trying the above strategies, you might consider the services of a Debt Arbitration Professional or even filing bankruptcy, but only as a last resort.

Filing bankruptcy will provide immediate and complete debt relief, but it will also stay on your credit record for ten years, making it virtually impossible to get a new loan (not necessarily a bad thing). The services provided by Certified Debt Arbitrators are a much better option.

Always keep one thing in mind: You aren't alone if you're in need of debt relief! Millions of Americans from all walks of life and all income levels find themselves in financial trouble at times, and you're entitled to the very same types of debt relief as everyone else.

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