Prepaid credit cards
A prepaid credit card is not really a credit card, as no credit is offered by the card issuer: the card-holder spends money which has been "stored" via a prior deposit by the card-holder or someone else, such as a parent. However, it carries a credit-card brand (Visa or MasterCard) and can be used in similar ways.
After purchasing the card, the cardholder loads it with any amount of money and then uses the card to spend the money. Prepaid cards can be issued to minors since there is no credit line involved. The main advantage over secured credit cards is that you are not required to come up with $500 or more to open an account. Also most secured credit cards still charge you interest even though you are not actually "borrowing" any money. With prepaid credit cards you are not charged nor paid any interest but you are often charged monthly fees after an arbitrary time period. Many other fees also usually apply to a prepaid card[1].
Prepaid credit cards are often marketed to teenagers for shopping online without having their parents complete the transaction.
After purchasing the card, the cardholder loads it with any amount of money and then uses the card to spend the money. Prepaid cards can be issued to minors since there is no credit line involved. The main advantage over secured credit cards is that you are not required to come up with $500 or more to open an account. Also most secured credit cards still charge you interest even though you are not actually "borrowing" any money. With prepaid credit cards you are not charged nor paid any interest but you are often charged monthly fees after an arbitrary time period. Many other fees also usually apply to a prepaid card[1].
Prepaid credit cards are often marketed to teenagers for shopping online without having their parents complete the transaction.
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