Many people, including those with no credit history or with less than perfect credit or with bad credit payment or outright bankruptcy, do not have many options when it comes to credit cards.
Most of the credit decisions taken by banks and credit card issuers depend on the credit history that indicates a successful and responsible use of credit. However, these situations are changing with the changing times.
Now there are new options for such customers. One such option is use of prepaid credit cards. Prepaid credit cards are an excellent way of getting into the line of credit for customers with absolutely no credit history such as students and teenagers.
There are several companies offering prepaid credit cards to people with no credit. Prepaid credit cards operate in a slightly different way than the regular credit cards. In a regular credit card, the card issuing bank is actually lending the cardholder some amount of money by way of credit. Customer is required to pay back the money by the end of the month. In case of prepaid cards, the funds in the card are provided by the customer or the cardholder himself. The cardholder is required to deposit certain amount of money in his credit account.
Purchases made using this card are equivalent to the amount available in the account. No interest charges are levied by the card issuing bank on the payments made by the customer using a prepaid card. All the credit payments made by the customer are directly reported to the major credit bureaus. Another advantage of prepaid credit cards that makes it ideal for no credit customers is that these are guaranteed approval credit cards.