Finance Credit Cards

Top 5 Best Prepaid Credit Cards To Build Credit

Prepaid Credit Cards To Build Credit
Top 5 Best Prepaid Credit Cards To Build Credit

Are you looking for Prepaid Credit Cards To Build Credit? If Yes, You are at the right place.

In this article, We are sharing Top 5 Best Prepaid Credit Cards To Build Credit.

Many people cannot qualify for unsecured or other types of credit cards. A prepaid card can provide an alternative. Many college students and other young adults prefer prepaid cards because they don’t require a credit check. They are also a good choice for those interested in establishing strong financial habits without incurring the financial responsibility that comes with credit cards.

There can be a lot of work involved in building your credit score. There are certain tools that will help you build an effective credit foundation much more quickly than other options, no matter if you’re starting from scratch or trying to repair a low score.

Credit cards are one of those tools. Credit card accounts can be a great way to build credit if you use them responsibly by making purchases and paying your bills on time. This is also a very convenient option, especially if you buy items you would have already bought with your debit card.

What is a Prepaid Credit Card?

What is a Prepaid Credit Card?
What is a Prepaid Credit Card?

Prepaid credit cards contain predetermined amounts of money that can be used for various purposes. Like a debit card, your card balance is deducted when you purchase. A debit card does not consist of borrowing money from a bank, as it is with a credit card that is secured or regular. Prepaid credit cards work similarly to debit cards and won’t affect your credit score. 

There is a difference between prepaid cards and credit cards. A prepaid card does not report activity to the three credit reporting agencies and will not help you build or maintain a good credit score. Prepaid cards work like gift cards and do not affect your credit score. They are known as general-purpose reloadable cards or GPRs.

Prepaid cards can be used for online shopping, paying bills, and withdrawing cash at ATMs, but they do not have a credit limit like credit cards. A prepaid card works the same way as a credit card, but you use your funds rather than your bank account or credit limit. That is, you do not borrow money.

How does a Prepaid Credit Card Work?

Purchasing prepaid cards from retailers or depositing funds into them is one way of loading funds onto them. There are a large number of major retailers who accept them, so you won’t need to carry cash. You should check the terms before you commit to a card before reloading it and using it with funds. There may be fees associated with this.

Transfer funds on prepaid cards can be transferred under the Electronic Fund Transfer Act Opens Overlay, commonly known as the Prepaid Rule. The use of this feature may offer some protection against lost or stolen prepaid cards. Prepaid credit cards typically have various protections, so read the terms and conditions carefully.

Here’s how prepaid credit cards work:

  • A prepaid credit card functions similarly to a debit card, except it is reloadable with money you pre-load on it rather than drawing funds from your bank account. 
  • The top-up credit cards can be reloaded in the future as long as they are reloadable. Credit card companies like Visa and American Express also provide several similar protections. 
  • Prepaid cards are available to anyone without requiring a credit check.

Prepaid Cards That Build Credit Are Secured Cards

A secured credit card can be a good option for establishing and rebuilding your credit if you have a thin credit history. The credit limit on a secured card is determined by the security deposit you pay, which becomes your borrowing power.

Your secured credit card payment must be made on time each month, and the payments must be reported to the credit bureaus.

There are some guaranteed approval unsecured credit cards for bad credit if you are interested in credit cards but have bad credit. However, there are a few prepaid credit cards that can help you build your credit and eventually qualify for an unsecured credit card.

Top 5 Best Prepaid Credit Cards To Build Credit

Chime Credit Builder Visa Credit Card

Chime Credit Builder Visa Credit Card
Chime Credit Builder Visa Credit Card

A secured credit card, Chime Credit Builder Visa, can improve your credit score. The security deposit will be used to pay off your balance, so you won’t have to worry about missing a payment.

This is a great option for people with bad credit looking for cards with $1,000 limits. However, it has some drawbacks. This credit card does not offer rewards, and you must open a Chime checking account to apply. This card has no annual fees and no interest charges.

You can transfer money from your credit card to your checking account when approved for a security deposit of $200.

First Progress Platinum Elite Mastercard Secured Credit Card

First Progress Platinum Elite MasterCard
First Progress Platinum Elite MasterCard

A credit card for bad credit can be a good option with the First Progress Platinum Elite Mastercard Secured. There is a limit of $200 to $2000 based on the amount of your security deposit.

Your First Digital Mastercard is valid anywhere Mastercard is accepted, and you will be invited to apply for an unsecured version after six months of on-time payments. There is an annual fee of $29; the card comes with a variable APR of 24.99%.

First Progress Platinum Elite Mastercard Secured credit cards have a mobile app and ongoing credit monitoring powered by Experian that gives you free access to your credit score.

Applied for Bank Secured Visa Gold Preferred Credit Card

Applied for Bank Secured Visa Gold Preferred Credit Card
Applied for Bank Secured Visa Gold Preferred Credit Card

Applied Bank offers secured Visa Gold Preferred credit cards for those looking to establish credit. There is a fixed APR of 9.99% and a $200 to $1,000 security deposit as your initial credit limit. The card comes with a $200 to $1,000 security deposit.

An annual fee of $48 will be deducted from your credit limit at the beginning. If you add $5,000 to your security deposit, your credit limit can be increased anytime.

The payment information is reported to all three major credit bureaus so that you can build your credit this way.

Capital One Platinum Credit Card

Capital One Platinum Credit Card
Capital One Platinum Credit Card

If you’re looking for a prepaid credit card that doesn’t charge annual fees, the Capital One Platinum Secured Credit Card is a good choice. Capital One will return your security deposit as a statement credit if you use your card wisely and make on-time payments. A credit limit increase could be granted automatically within six months as well.

Aside from featuring $0 fraud liability if your card is lost or stolen, the Capital One Platinum Secured Credit Card also boasts credit score updates by CreditWise through TransUnion or Experian and no foreign transaction fees.

OpenSky Secured Visa Credit Card

OpenSky Secured Visa Credit Card
OpenSky Secured Visa Credit Card

Consider the OpenSky Secured Visa credit card if your credit score is better. The application process is easy, especially if you do not have a credit history and no credit check is involved. The three main credit bureaus receive reports about payments.

There is a fee of three percent for foreign transactions, a $35 annual fee, and a 20.14 percent APR on the card. Online applications are quick and easy to complete. An application does not require a credit check or a bank account, but a down payment is required.

Types of Prepaid Credit Cards

The two types of prepaid credit cards are open-loop and closed-loop.

  1. Open-Loop. Prepaid credit cards with an open-loop network can be used anywhere credit cards are accepted. For example, an open-loop prepaid credit card bearing the Visa logo can be used anywhere Visa cards are accepted.
  2. Closed-Loop. Prepaid credit cards with closed loops, also known as single-purpose cards, can be used only at one retailer or group of retailers. The card may only be valid at a certain chain of grocery stores. There is typically no credit card network logo on closed-loop prepaid credit cards.

Secured Credit Card vs. Prepaid Credit Card

Secured Credit Card vs. Prepaid Credit Card
Secured Credit Card vs. Prepaid Credit Card

A secured credit card is different from a prepaid credit card. The purpose of a secured credit card is typically to build credit. You are required to put down a security deposit to get a credit limit. Your credit score is affected by the credit bureaus reporting your usage.

The prepaid card, however, does not require a credit check or contribute to building credit since it is not tied to a credit line. The card works more like a debit card, allowing you to manage your money without making payments.

FeatureSecured Credit CardPrepaid Credit Card
Security depositRequiredNot required
Credit limitEqual to security depositEqual to amount loaded onto card
Credit bureau reportingYesNo
Helps build creditYesNo
Secured Credit Card vs. Prepaid Credit Card

Prepaid Cards vs. Cebit Cards vs. Credit Cards

The prepaid card does not require a bank account, unlike debit cards. Unlike credit cards, no credit line is attached to prepaid credit cards. A bank or financial institution issues a prepaid card. The only money you can access is what you’ve loaded onto it. The loan does not involve a loan or payment of a deposit.

It’s essential to differentiate between prepaid cards, debit cards, and credit cards:

  • Prepaid Cards: Use your own money, no credit check, no interest, and no impact on your credit score.
  • Debit Cards: Linked to your checking or savings account, spend your money with no interest or impact on your credit score.
  • Credit Cards: Borrow money from the issuer, pay interest on balances, and impact credit score positively or negatively based on use and payment history.
FeaturePrepaid cardDebit cardCredit card
Funds sourceMoney loaded onto the cardMoney in your bank accountCredit line from a lender
Credit bureau reportingUsually noYesYes
Interest chargedUsually noNoYes, on unpaid balances
Annual feeMay or may not haveUsually noMay or may not have
Overdraft protectionMay or may not haveMay or may not haveMay or may not have
Cash withdrawalsMay or may not be allowed at ATMsMay or may not be allowed at ATMsMay or may not be allowed at ATMs
Online purchasesYesYesYes
In-person purchasesYesYesYes
Prepaid Cards vs. Cebit Cards vs. Credit Cards

The Pros and Cons of Prepaid Cards

Prepaid cards function like any other cards in most cases. Most point-of-sale systems will accept it and allow you to make purchases with it. Prepaid cards seem pointless to some people since cash is the easiest method of payment. It is important to weigh the pros and cons of prepaid cards. Here are a few examples:

Pros of a Prepaid Card

Prepaid cards are more accessible than credit cards

Prepaid cards are the best option if you don’t think you’ll qualify for a credit card because you won’t have to worry about qualifying for a particular card. Prepaid cards do not require a credit check from the issuer.

Overspending won’t be an issue

Undoubtedly, many of us are susceptible to deals and offers. The good news is that you’ll be able to take advantage of all the opportunities for rewards, but the bad news is that it can be challenging to avoid overspending. Prepaid cards come in handy because they have a set spending limit. With an impromptu shopping trip, you won’t rack up debt since all you can spend is what you have loaded on your card.

There is no need to worry about missing a payment

There are advantages and disadvantages to traditional credit cards. If you use a prepaid card, you don’t have to worry about taking on too much debt. With a prepaid card, you can shop virtually anywhere without worrying about late payments or credit card bills.

Prepaid cards are easier to carry around than cash

Prepaid cards are only accessible by thieves if the amount loaded on them is stolen, not your entire bank account like a debit card. The consequences of fraudulent credit card charges can still affect your credit rating even if your card has zero fraud liability.

Cons of a Prepaid Card

Less protection for consumers

The protections offered by prepaid cards are fewer than those offered by credit cards. Prepaid account holders are now protected through the Consumer Financial Protection Bureau, including protections in case of errors, losses, and theft and easier rules regarding prepaid account fees that issuers must follow.

The protections offered by these cards are less strong than those offered by traditional credit cards, but these are steps in the right direction for consumers who already own prepaid cards.

Your credit score won’t be affected

Since you aren’t borrowing money, the three credit bureaus need to receive information regarding any activity you carry out using a prepaid card. You don’t get the same protections from prepaid cards as credit cards, but they can help you achieve your credit goals because they inspire financial habits like not spending more than what you have on hand. It may be beneficial to become an authorized user or apply for a secured credit card if you are looking to improve your credit score.

There can be a lot of lingering fees

Prepaid cards contain fees, so know them before buying one. In some cases, cardholders may need to pay fees to withdraw cash, top up their cards, check their balances, or even purchase items with prepaid cards.

Does a prepaid credit card build credit?

You cannot build credit with prepaid credit cards. A prepaid credit card isn’t just a credit card; prepaid credit cards have different benefits than credit cards, such as borrowing money from a lender. A prepaid card is more like a gift or debit card than a credit card. Payments are made using a card you load with money and swipe or use online.

Since you aren’t borrowing funds, prepaid credit cards do not contain any information about your payment history or balance to report to the credit bureaus. The card will only affect your credit score positively or negatively if there is information to report.


How are prepaid cards different from debit cards or credit cards?

Unlike a debit card, a prepaid card is not linked to a bank account. Unlike a credit card, a prepaid credit card does not come with a credit line. No lines of credit or regular checking accounts are associated with prepaid cards issued by banks and financial institutions. It only lets you access the money that you have loaded onto it. A loan or deposit needs to be taken out.

Do prepaid credit cards help build credit?

Prepaid cards are not typically used to build credit. These cards are more like debit cards, except you can only spend the money you’ve loaded on them. You won’t improve your credit score with them since they don’t report to the credit bureaus.

What is the maximum limit on a prepaid credit card?

Prepaid credit cards offer varying limits, but some can be loaded with up to $10,000, depending on the card provider. This is not a credit line, so these funds will not directly affect your credit score.

What is the quickest way to build credit?

You can build credit quickly by keeping your credit utilization low, paying all your bills on time, and maintaining various credit types. Furthermore, you can increase your credit score by becoming a user on the credit card of a responsible person.

About the author

Vishal Agrahari

Vishal Agrahari is an experienced content writer and financial expert. With his creative and technical expertise in finance and credit cards, he creates content on AquilaResources that is both engaging and useful for readers. He brings a strong background in finance and credit cards that make bring authenticity to his content along with an interest in research to every project he works on.

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