If you are not able to qualify for a standard credit card, you might want to look into the benefits of prepaid debit cards.
The original cards
Originally, this was a card you would use by depositing a sum of money with the bank to “collateralize” the card. This then became your “credit limit,” meaning that once you used whatever amount of money you had deposited, the card became unusable.
Back in the 1990, when these cards were first introduced, your credit line was set at 100 percent of the money you deposited. However, once you established a satisfactory payment history, the bank would often begin extending gradual amounts of credit beyond your deposit–sometimes up to 200% of it. This was a way for people to establish a stable credit history that could eventually be used to get a regular credit card.
Today’s cards
Today those secured credit cards have morphed into prepaid cards. This is where you load funds directly into a Visa® or MasterCard® prepaid debit card. You can do this either at a merchant location or online with the bank where you got the card. These cards work pretty much like a prepaid phone card and basically just convert paper currency into funds you can access with a card. Your credit line will always be set at whatever amount you had deposited and then drawn down when you make purchases until you reach a zero balance at which time you will have to load more money into the card.
The advantages of prepaid debit cards
One of the biggest advantages of these cards is that they are safer to carry than cash. Also, they work worldwide due to the fact that Visa® and MasterCard® cards are accepted by merchants everywhere. These cards also give anyone over the age of 18 the ability to get a “credit” card without regard to their credit history and without having to worry about getting into debt. Plus, you can reload one of these cards with any amount of money online, over the phone or at an ATM anywhere.
The disadvantages
Of course, there are also disadvantages to prepaid debit cards. For example, they don’t give you the luxury of using the bank’s funds for 25 days for free. And if you lose the card or if it is stolen, both Visa and MasterCard have much stricter notification requirements than those that come with a credit card.
However, the advantages of prepaid debit cards usually outweigh their disadvantages, something that is especially true for a person who can’t get a standard credit card because of a lack of a credit history or because of a less than perfect credit rating.