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Two Cards for People Who Can’t Get Credit Cards

[Sunday, November 30th, 2014]

If your credit is poor and you find yourself getting turned down for credit cards again and again, you may worry that there is no way you will ever be able to get a credit card. Maybe a divorce, an illness, or unemployment left you with a bad credit rating. Or maybe you are young and don’t have any credit history. There are lots of reasons people get turned down for credit cards. But before you give up, take a look at these two types of cards that people who can’t get credit cards actually can get:

1. Prepaid cards.A prepaid card works like a credit card, but instead of making a purchase and paying the bank or credit issuer later, you put money on the card up front. So when you are buying something, you’re actually paying money for it and won’t owe anything later.

Prepaid cards aren’t credit cards, and they aren’t debit cards either. Reloadable prepaid cards are, in fact, a lot like cash—only more convenient. And, they can be used in places where you would want to use a credit card. Pay for dinner, shop online, pay at a parking meter, or pay your bills with one of these cards, and you’ll have all the convenience of a credit card without the worry about getting approved or paying off your debt.

These cards can even be a replacement for a bank account. You can have your paycheck direct deposited to a prepaid card, get cash from an ATM, pay for purchases, and track your spending through an online account center or mobile phone app. The best thing is, anyone can get a prepaid card. There is no approval process required. You will, however, have to submit your personal information, including your Social Security number, in order to get a prepaid card. Be aware, though, that a prepaid card will not do anything to change or improve your credit score, no matter how responsibly you use it.

2. Secured credit cards.Sort of like a halfway point between a prepaid card and a regular, unsecured consumer credit card, a secured card acts like a credit card but has protections in place, making lenders more likely to extend credit to people with a poor credit history. Applicants put down a lump sum as collateral on the “loan” – which is, basically, what a line of credit is. The line of credit is then equal to the collateral. Cardholders then use the secured credit card just as they would a regular card. They pay off their balance every month, and if they don’t, they incur interest. There’s a minimum payment due every month, even though the credit issuer already has enough money to cover the debt. The collateral has to stay with the bank to ensure they won’t be left holding the bag if you default on the loan.

The advantage of a secured card is, you can actually improve your credit when you use one. Make sure the company reports to credit bureaus; if they don’t, using the secured card won’t help your credit. However, if they do report to the bureaus, then responsible use of the card will help repair your credit.

See also

Q: Here’s Why Secured Credit Cards Are So Popular Right Now

Over the past several years, secured credit cards have enjoyed a boom in popularity. And yet, some people still don’t know what they are, or how they’re different from other types of credit cards. So what’s the reason behind the newfound status of secured credit cards? First, let’s go over what a secured card actually […]

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Q: 3 Steps To Getting Your Credit Back On Track

Having bad credit can feel like you’re in a sinking ship without a life jacket. It’s a scary feeling, and it can be very isolating. The shame associated with having poor credit doesn’t help; you may feel guilty, and that you’ve done something wrong. But this may not be the case at all. Many people’s credit suffers through no fault of their own.

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Q: Why Secured Cards Are The Hottest Trend In Credit

Once upon a time, not many people had heard of secured credit cards. And even those who had heard of them weren’t so clear on what exactly they were.

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Q: The Best Cards for Improving Credit

If your credit has suffered due to a job loss, a divorce, illness, or any other circumstance, you might be wondering whether you’ll ever be approved for a credit card again.

more ››
Q: What Makes a Secured Credit Card Secure

Many people may not be familiar with the term secure credit card. If it’s your first time stumbling on secured credit cards, you may wonder what they are.

more ››
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