The twist on a prepaid credit card is that there is never any debt as there is with a regular credit card. With a prepaid card, you deposit money into the account and that is the available spending limit. It’s almost like using a debit card against a checking account. Whatever amount of money is available in that account is available to use for spending. Many people find this to be more convenient and safer than carrying cash.

Some prepaid cards may require a small fee to open the account, but unlike a bank or credit card there are usually no additional fees to pay. There is never an interest rate because nothing is being charged and there is never any debt.

Unlike debit cards, though, many prepaid credit cards are reported to your credit history just like a regular credit card. It’s an inviting option and a reasonable alternative to using debit cards because of the credit reporting benefit. A debit card from a checking account will not be reported to a credit report.

Using a prepaid credit cards is also a great tool for those who have no credit history and would like to build credit without accumulating debt. Prepaid credit cards are becoming quite popular.

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