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Differences between a credit card and a Prepaid Credit Card

By: Clint Jhonson

There are several differences between a credit card and a Prepaid Credit Card and in order to understand all of them one should be able to know what each of them means. A credit card is a card one can use to buy something even if they do not have money in the account. This means that they have a line of credit. This line of credit can be as small as a couple hundreds dollars or as big as several thousands dollars. A Prepaid Credit Card is backed up by an account where you have to deposit money before actually being able to use the card.

In order to get a credit card you have to fill in a credit card application. Then you can get approved or denied by the bank where you applied for the credit card. The time you need for a credit card application is shortened by the online forms, but getting approved does not mean you can start using the money. In fact you do not even know how much your line of credit is. If approved you have t wait for the actual card to be sent to you and activate it before you can actually take advantage of your new credit card. The approval of a credit card application depends on how good your credit history or your credit score is. If this is the first credit card you every applied for it might take longer to get an answer, but it is still a shorter period of time than if you were using the regular mail. Even when you get approved for a credit with a relatively small credit line it is a good idea to try and spend only half or less of the amount credited in order to increase your credit score.

On a credit card once the credit limit is reached the card gets declined and cannot be used until payments are made toward the credited amount. On a prepaid card the card gets cancelled once there is no money left on it or the amount needed is bigger than the amount left on card. The prepaid one is also a better beginner’s credit card especially for teenagers and people who want to better manage their finances. If you have a prepaid card you will think twice before buying something, but chances are that you will actually buy the thing if you have a credit card even if you do not need the thing itself. A lot of times people apply for a credit card to help them get out of debts, but without realizing that most probably they will get into bigger debts than before getting the card.

When you apply for a credit card you need to fill in the credit card application with all sorts of information about your housing situation, employment situation, annual income and more. This does not happen with the Prepaid Credit Card since no one really cares where you get the money you put on the card from. With a prepaid card you decide how much money you want to put on the card, but with a credit card the credit limit can stay the same, can increase and even decrease depending on the activity of the card as well as how you make your payments.

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The main advantage of the credit card in comparison with the Prepaid credit card is that you can get a bigger amount of money than you actually have. The downside of the credit card is that you have to fill in at least a credit card application if not several before you can get a credit card and you have to get approved before actually receiving it.




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