Credit is an equity that you can’t afford to lose. Unfortunately, if you don’t have credit, it’s almost impossible to build it, and if you have bad credit, trying to recover your good standing may be one of the most difficult life challenges you ever face.

One option that may be valuable to you in the hard fought battle to obtain/restore your good credit is a prepaid credit card.

What is a Prepaid Credit Card?

It works like any major credit card and is accepted at the same locations. The biggest difference is that you are not using a fixed line of credit which you are ‘borrowing’ from the credit card provider based, essentially, on the equity of your name… your identity. (Who you are is representative of the assets you hold.)

With a prepaid credit card, you are extended a credit line based on one of your most solid assets… your actual cash on hand. It works much the same as depositing money into a checking account and using checks to make purchases, but with a prepaid credit card you stop spending the minute your cash is gone… no ‘bounced checks’, as it were.

And unlike major credit cards, there’s no spending limit with a prepaid.

Needles to say, the benefits are all too readily apparent. You have the spending power and convenience associated with checks and credit cards, without all the negative fees and sky-high interest rates.

You do have some small fees, however. It costs up to $10.00 just to open an account and you will also have to pay a minimal fee each time you deposit cash into that account.

But when you consider that this opens up a whole new world of opportunities you didn’t have access to before, you might definitely consider it a ‘must’.

What benefits, you may ask. Remember, in today’s society you can only secure a car rental with a credit card. You can also only pre-order movie, concert and sporting tickets using a credit card. Most major expenses or purchases can only be broken down into payments with a credit card, at the very least you avoid the heavy financing charges associated with a payment plan done any other way. You can also recharge prepaid cell phones and cards with credit cards. You can also only make hotel and airline reservations using credit cards.

The world runs on a credit line, and in today’s society it’s a much more accessible option than it ever used to be in the past.

Michael writes for Card Sense where you can find more information on pre paid credit cards as well as credit cards for people with adverse credit.

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