Question: I have a lousy credit score and am taking steps to improve it. In the meantime, I need to get a prepaid credit or debit card so I can pay for things like airfares, rental cars, hotel reservations, etc. Can you suggest the best prepaid card to go with? My initial Internet search for said cards resulted in a headache trying to figure out if these companies were a good deal or just a consumer nightmare. Any help is greatly appreciated. Mark, Duluth, MN
Answer: I would steer clear of prepaid credit cards. They aren’t a good deal for most people (high fees, etc.) and the activity on a prepaid card isn’t reported to the various credit bureaus. A prepaid credit card doesn’t improve your credit score.
A good tactic for anyone working toward boosting a poor credit score is to take out a “secured” credit card. The basic idea is that you open up a special savings account with a bank or credit union. Your credit limit on the card is equal to or somewhat less than the amount on deposit. A majority of banks and credit unions offer customers the option of a secured credit card.
Eventually, after you’ve paid the secured credit card bill on time for a certain period, you should qualify for a traditional (unsecured) credit card.
When it comes to secured credit cards, it pays to shop around. The minimum requirements and other terms vary a lot. Secured credit cards also come with higher fees than regular credit cards. You can get information on rates and terms of secured credit cards at Bankrate.com and Cardhub.com
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