The Ultimate Guide to Credit Cards
Monday, October 18, 2021

Prepaid Cards That Build Credit in 2021

Prepaid Cards That Build Credit

credit card advice

Choncé Maddox
By: Choncé Maddox
Posted: March 31, 2021
Advertiser Disclosure

Are there prepaid cards that build credit? The short answer is no if you’re thinking in terms of a prepaid debit card where you would load funds onto the card for everyday use.

Prepaid credit cards, however, are often referred to as secured credit cards and can certainly help you build credit. We’ll look at both secured cards and prepaid cards and explain the differences between the two so you can decide which is the right addition to your wallet.

Secured Cards | Prepaid Cards | FAQs

Prepaid Cards That Build Credit Are Secured Cards

Secured credit cards are one of the best options to rebuild your credit or establish a positive credit history if you have a thin credit profile. With secured cards, you pay a security deposit which then becomes the credit limit that you can borrow against when you charge your card.

Each month, you’ll need to pay your secured credit card bill on time and the payments should be reported to the major credit bureaus to improve your score.

  • No annual or hidden fees. See if you're approved in seconds
  • Building your credit? Using the Capital One Platinum Secured card responsibly could help
  • Put down a refundable security deposit starting at $49 to get a $200 initial credit line
  • You could earn back your security deposit as a statement credit when you use your card responsibly, like making payments on time
  • Be automatically considered for a higher credit line in as little as 6 months with no additional deposit needed
  • Enjoy peace of mind with $0 Fraud Liability so that you won't be responsible for unauthorized charges
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
26.99% (Variable)
$0
Limited, Bad

The Capital One Platinum Secured Credit Card is one of the best prepaid credit card options to consider if you’re looking for no annual fees. You can choose from three different amounts to put a security deposit down and start using the card. As you use your card wisely and make on-time payments, you will help build your personal credit score, and Capital One will return your security deposit as a statement credit. In as little as six months, you could be automatically approved for a credit limit increase as well.

As with all Capital One Cards, the Capital One Platinum Secured Credit Card also comes with features like $0 fraud liability (if your card gets lost or stolen), CreditWise credit score updates through TransUnion or Experian, and no foreign transaction fees.

OpenSky® Secured Visa® Credit Card Review

at Capital Bank'ssecure website

SECURED RATING

★★★★★
4.7

OVERALL RATING

3.2/5.0
  • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
  • The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
  • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
  • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
  • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
  • OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
17.39% (variable)
$35
Poor

The OpenSky® Secured Visa® Credit Card is best for anyone looking to repair their credit or start establishing a credit history. Open Sky won’t check your credit when you apply for its prepaid card, so everyone is given a fair opportunity. Instead, you’ll just choose a line of credit and secure it by making a one-time refundable deposit. Your deposit is held in an FDIC-insured account, and the full amount (minus any amounts or fees owed) will be returned to you after your card is closed.

You can use the OpenSky® Secured Visa® Credit Card on everyday purchases at any retailer that accepts Visa. Just submit at least your minimum payment due on time each month, and your positive payment history will be reported to Equifax, Experian, and TransUnion to help improve your credit score.

Applied Bank® Secured Visa® Gold Preferred® Credit Card Review

at the issuer'ssecure website

SECURED RATING

★★★★★
4.6

OVERALL RATING

4.0/5.0
  • Better than Prepaid...Go with a Secured Card! Load One Time - Keep On Using
  • Absolutely No Credit Check or Minimum Credit Score Required
  • Automatic Reporting to All Three National Credit Bureaus
  • 9.99% Low Fixed APR - Your Rate Won’t Go Up Even if You Are Late
  • Activate Today with a $200 Minimum Deposit - Maximum $1,000.
  • Increase Your Credit Limit up to $5,000 by Adding Additional Deposits Anytime
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
9.99% Fixed
$48
Poor/Fair/Limited/Damaged

The Applied Bank® Secured Visa® Gold Preferred® Credit Card has a low APR compared with other secured credit cards and no application fee. You can choose how much your refundable deposit is to secure the card, and your payments will be reported to all three major credit bureaus.

There is no credit check or minimum credit score required to apply and you can increase your credit limit after approval by adding additional deposits at any time. Something to be aware of with this card is that it does not have a grace period, so all purchases will begin to accrue interest the same day they’re made.

Bank of America® Customized Cash Rewards Secured Credit Card Review

at the issuer'ssecure website

SECURED RATING

★★★★★
4.6

OVERALL RATING

4.0/5.0
  • Earn 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings and 2% cash back at grocery stores and wholesale clubs on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1%
  • Unlimited 1% cash back on all other purchases
  • A minimum refundable security deposit of $300 (maximum of $4,900) is required to open this account
  • Access your FICO® Score updated monthly for free, within your Mobile Banking app or in Online Banking
  • Optional overdraft protection option helps prevent declined purchases, returned checks or other overdrafts when you link your eligible Bank of America® checking account to your credit card. Transfer fees may apply.
  • $0 annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
23.99% Variable
$0
Bad/Limited

The Bank of America® Customized Cash Rewards Secured Credit Card looks and works just like any other credit card. While you will need to put down a security deposit to open your account and receive your credit limit, this secured card also allows you to earn rewards for your spending.

Cash back can be redeemed as a statement credit, a deposit into your Bank of America checking or savings account or even a contribution to a qualifying 529 account. As you continue to pay your credit card bill on time each month, Bank of America will review your account and may qualify you to have your security deposit returned.

Another benefit of using this prepaid credit card is that you can access your FICO score each month for free within the mobile app. Just opt-in to receive your score and gain the necessary information to improve your credit over time.

BankAmericard® Secured Credit Card Review

at the issuer'ssecure website

SECURED RATING

★★★★
4.4

OVERALL RATING

4.3/5.0
  • A secured credit card designed to help establish, strengthen or rebuild credit
  • A minimum refundable security deposit of $300 (maximum of $4,900) is required to open this account
  • Access your FICO Score updated monthly for free within your Mobile Banking app or in Online Banking
  • Your account will periodically be reviewed, and, based on your overall credit history (including other credit cards and loans), you may qualify to have your security deposit returned. Not all customers will qualify.
  • $0 annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
22.99% Variable
$0
Bad/Limited

The BankAmericard® Secured Credit Card is another option to help you build your credit score over time by making on-time card payments that get reported to all three major credit bureaus. Unlike the Bank of America® Customized Cash Rewards Secured Credit Card, this credit card does not offer cash back rewards.

However, you can still choose from a wide range of deposit amounts to create your credit limit for this secured card. You can also get access to your free FICO score and get your security deposit amount refunded to you after a few months of making on-time payments and not exceeding your credit limit.

Citi® Secured Mastercard® Review

at the issuer'ssecure website

SECURED RATING

★★★★★
4.5

OVERALL RATING

4.4/5.0
  • The Citi® Secured Mastercard® is a no annual fee credit card that helps you build your credit when used responsibly
  • Unlike a debit card, it helps build your credit history with monthly reporting to all 3 major credit bureaus. Once available, you will also have free access to your FICO score online.
  • Use your card anywhere Mastercard® is accepted — worldwide
  • A security deposit is required. Once approved, your credit limit will be equal to your security deposit (minimum of $200).
  • Get help staying on track with Auto Pay and account alerts
  • With Flexible Payment Due Dates, you can choose any available due date in the beginning, middle or end of the month
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
22.49% Variable
$0
Limited History, No Credit, New-to-Credit

The Citi® Secured Mastercard® has no annual fee and allows you to start with a low secured deposit to open your account. This card is ideal for someone with no credit or a very limited credit history since all payments are reported to the three major credit bureaus and will help you build your credit score.

Citi also allows cardholders to choose their own payment date so you can decide whether they want to pay your credit card bill at the beginning, middle, or end of the month. The Citi® Secured Mastercard® also provides free FICO score updates, fraud alerts, and $0 liability on unauthorized charges.

7. Wells Fargo Business Secured Credit Card

This card is currently not available.

Secured Rating

★★★★★
N/A

OVERALL RATING

N/A
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
N/A
N/A
N/A

If you’re looking for prepaid business credit cards to build your business credit score, consider trying the Wells Fargo Business Secured Credit Card. You can make a much larger security deposit if you wish to obtain a high credit limit (up to $25,000).

You’ll earn a fixed cash back rate per dollar spent, and you’ll also receive bonus points for increased company spending. Of course, the key is to use the card wisely by avoiding spending too close to your credit limit and paying your bill on time each month to build business credit.

The Wells Fargo Business Secured Credit Card also allows you to add up to 10 employee cards and charges no foreign transaction fees. Wells Fargo will review your account’s spending and payment history to see when it’s time to automatically upgrade you to an unsecured version of its business credit card. Unsecured credit cards are great for earning more rewards, obtaining a higher limit, and even initiating a balance transfer.

(The information related to Wells Fargo Business Secured Credit Card has been collected by CardRates.com and has not been reviewed or provided by the issuer or provider of this product or service.)

Discover it® Secured Credit Card Review

at Discover Card'ssecure website

SECURED RATING

★★★★★
4.5

OVERALL RATING

3.7/5.0
  • No Annual Fee, earn cash back, and build your credit with responsible use.
  • Using your secured credit card helps build a credit history with the three major credit bureaus. Generally, prepaid and debit cards can’t do that.
  • Establish your credit line with your tax return by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Discover is accepted nationwide by 99% of the places that take credit cards.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
10.99% for 6 months
22.99% Variable APR
$0
New/Rebuilding

The Discover it® Secured Credit Card has no annual fee and can help you establish your credit after you make a refundable security deposit. You can choose the deposit amount that will set your initial credit limit. Discover does consider your credit and income when applying for this card.

The Discover it® Secured Credit Card also provides you with a free FICO score and the opportunity to earn cash back rewards. After eight months, Discover will start the process of reviewing your account to see whether you qualify to switch to an unsecured credit card. If approved, your security deposit will be refunded to you and you can continue using it as an unsecured credit card to build and maintain good credit.

Savings Secured Platinum Rewards Credit Card Review

at the issuer'ssecure website

SECURED RATING

★★★★
4.3

OVERALL RATING

4.1/5.0
  • Earn Flexpoints Rewards - 1 point for every $1 spent
  • Use the card responsibly and you can be automatically graduated to a Platinum Rewards Credit Card
  • Visa card benefits like Roadside Dispatch, a pay-per-use roadside assistance program
  • 25-day grace period on purchases
  • ATM cash advance fee of $3.00 (no cost at teller)
  • Ability to join SDFCU and apply at the same time
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
11.99%
$0
N/A

The Savings Secured Platinum Rewards Credit Card is offered through the State Department Federal Credit Union, and it’s a little different from many of the other cards on this list. This secured credit card actually uses funds from your savings account to secure the deposit and activate your credit limit. You can use the Savings Secured Platinum Rewards Credit Card just like any other credit card, and you’ll earn rewards points for every dollar spent.

Flexpoints Rewards can be used to buy gift cards and merchandise and save on hotel stays and airline tickets, among other options. This card also has no annual fee, no foreign transaction fee, and provides you with a free credit score so you can monitor your credit month after month. As you use your secured credit card responsibly, you can be automatically upgraded to an unsecured platinum rewards credit card.

Prepaid Cards That Do Not Build Credit

Keep in mind that some prepaid cards do not build credit. These are not secured credit cards or charge cards, so you’ll use them more like a debit card and load your own funds to make purchases. Using a prepaid debit card can still be beneficial since your funds can be FDIC-insured, and some prepaid cards still offer rewards.

Below are five prepaid cards that do not build credit but can help you make purchases that require a card.

PayPal Prepaid Mastercard® Review

at Netspend'ssecure website

PREPAID RATING

★★★★★
4.8

OVERALL RATING

3.6/5.0
  • Move money from your PayPal account to fund your prepaid card account.
  • Earn cash back and personalized offers, just for using your card.
  • With Direct Deposit, you can get paid faster than a paper check.
  • Card issued by The Bancorp Bank, Member FDIC. Card may be used everywhere Debit Mastercard is accepted.
  • Click PayPal Prepaid Mastercard® for additional features & program details, and to request a Card.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
N/A
Variable Monthly Fee
Not applicable

The PayPal Prepaid Mastercard® is accepted wherever Mastercard is accepted and allows you to load money onto your card at no cost. This card does come with a small monthly fee but loading money onto your card is easier than ever, especially if you already have a PayPal account.

You can set up direct deposit, transfer money from your PayPal account to your prepaid card, or load cash or checks in person at any of the 130,000 reload stations across the U.S.

NetSpend® Visa® Prepaid Card Review

at Netspend'ssecure website

PREPAID RATING

★★★★★
4.8

OVERALL RATING

3.5/5.0
  • With Netspend Direct Deposit, you can get paid faster than a paper check.
  • No late fees or interest charges because this is not a credit card.
  • No Overdraft Fees on purchases using your card.
  • Use the NetSpend Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply).
  • Card issued by MetaBank®, Member FDIC. Card may be used everywhere Visa Debit cards are accepted. Click "Get My Card" for full details.
  • See additional NetSpend® Prepaid Visa® details.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
N/A
Variable Monthly Fee
Not applicable

NetSpend has been around for over 20 years and the NetSpend® Visa® Prepaid Card is one of the most popular options for prepaid debit cards. There is no credit check required to apply for a prepaid card and most cardholders can expect their paycheck at least two days early once they set up direct deposit.

You can now also receive cash back for qualifying purchases and there is no overdraft fee on purchases. Purchase Cushion is a feature that allows NetSpend to cover up to $10 if you happen to spend slightly more than what’s available on your card. The money will later be deducted from your balance the next time you load your card.

NetSpend offers a mobile banking app that you can use to check your account balance and see your transaction history. You can also use this app for mobile check deposits, and you are protected against unauthorized purchases with zero liability protection.

Brinks Prepaid Mastercard Review

at Netspend'ssecure website

PREPAID RATING

★★★★★
4.8

OVERALL RATING

3.7/5.0
  • Brink’s gives you the peace of mind you deserve. Securing cash and valuables since 1859.
  • With Brink’s Direct Deposit, you can get paid faster* than a paper check.
  • No late fees or interest charges because this is not a credit card.
  • Use the Brink’s Money Prepaid Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply.)
  • *Card issued by Republic Bank & Trust Company, Member FDIC. Card may be used everywhere Mastercard Debit cards are accepted. “Apply Now” for full details.
  • See additional Brink’s Prepaid Mastercard® Details.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
N/A
Variable Monthly Fees
Not applicable

With the Brinks Prepaid Mastercard, you can reduce your monthly maintenance fee by setting up direct deposit of at least $500 per month. There is a high foreign transaction fee with this card, so you should avoid using it outside of the country or with foreign merchants for online purchases. There are also a few other fees to watch out for with this card, like if you choose to load it with funds at a NetSpend Reload Network Location.

However, when you do set up direct deposit, you can expect to get paid two days earlier and you’ll also get rewards with cash back offers for eligible purchases. Like the NetSpend® Visa® Prepaid Card, the Brinks Prepaid Mastercard allows you to receive a $10 Purchase Cushion if you happen to slightly go over the amount you have loaded onto the card.

Serve® American Express® Prepaid Debit Account Review

at the issuer'ssecure website

PREPAID RATING

★★★★★
4.6

OVERALL RATING

3.8/5.0
  • Enjoy FREE withdrawals at over 30,000 MoneyPass® ATM locations nationwide. You can also use non MoneyPass® ATMs, but fees may apply
  • Get access to your money up to 2 days faster with early Direct Deposit
  • No monthly fee when you direct deposit $500 or more within a statement period
  • Use Online Bill Pay to help you save time and help you avoid late fees. Terms apply.
  • Check your balance and recent transactions, pay bills on the go, get SMS text alerts, and send money to family or friends who have a Serve Account
  • No credit check, no hidden fees
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
N/A
N/A
Not applicable

The Serve® American Express® Prepaid Debit Account offers many of the same features you’d get with a bank card. Along with free early direct deposit and free online bill pay, you can reload your card for free at thousands of locations including CVS, Dollar General, Family Dollar, and Walmart.

You can waive the monthly fee for this card by setting up monthly direct deposits of at least $500. Overall, the Serve® American Express® Prepaid Debit Account has very few fees and no hidden fees.

What is a Prepaid Card?

A prepaid debit card is similar to a gift card but provides many extra features and benefits. You can only spend the amount that you loaded onto the card. Prepaid debit cards can be used for in-store shopping, online purchases, and to pay bills. You may even have access to make mobile check deposits and view your transaction history through an app.

Secured vs. Debit vs. Prepaid Cards

However, prepaid cards are not connected to a bank account like a debit card is.

The downside is that prepaid cards don’t help you build credit as a credit card would, and they still do come with some fees like monthly maintenance fees and withdrawal fees. Still, storing your money on a prepaid card can be safer than carrying around cash.

Most prepaid cards are FDIC-insured and many provide zero fraud liability benefits in the event that your card gets stolen and someone uses it to make an unauthorized purchase. Plus, some prepaid cards are now even offering transaction alerts and mobile account features through an app as well as cash back rewards on everyday spending.

Can I Build Credit With a Prepaid Card?

Prepaid cards do not help you build credit. Prepaid cards function very similar to a debit card and allow you to load funds that you wish to spend either via direct deposit transfers or another way.

In short, you only spend the money you put on a prepaid card, while with a credit card, you can borrow against a fixed credit limit. With a credit card, you make monthly payments that are then reported to the three major credit bureaus.

If you have a thin credit history or are looking to rebuild your credit, secured credit cards are the best option to consider. Prepaid cards, on the other hand, often don’t require a credit check, and there are no interest or minimum monthly payment charges.

How Do I Get a Prepaid Card?

There are several ways to get a prepaid card. You can buy them at retail locations like grocery stores and drug stores. But one of the most common ways is to order a prepaid cash card online from a prepaid card issuer for free.

PayPal Mastercard Application

You can order a prepaid card for free online.

You can visit the website for any of the prepaid cards we listed above to order your card. It may take a few business days for your card to arrive in the mail. You’ll need to provide personal information that includes your Social Security number to verify your identity.

Are Prepaid Cards Good For Building Credit?

Prepaid debit cards are not good for building credit. The only prepaid cards that build credit are secured credit cards.

Secured credit cards provide one of the best opportunities to build your credit over time. Secured credit cards are often considered prepaid cards because you have to put a deposit down first that you can then borrow against.

Paying your bill on time each month is the key to building your credit with a secured card. Secured credit card companies report your payment history to all three major credit bureaus. You want them to report a positive payment history so you can demonstrate to future lenders that you are a responsible borrower.

Set reminders to pay at least your minimum monthly payment each month or more. You can also set up automatic payments so when your statement cycle ends and your bill is due, the payment is instantly transferred from your checking account. Paying your secured credit card bill late could damage your credit and you could also receive a late fee.

Another way that prepaid secured credit cards help you build your credit is by keeping a line of credit open long-term. The age of your accounts is an important factor that impacts your credit score and credit report. So, while you can build credit with a credit builder loan from your bank, for example, once that loan is paid off, that account will close, and the positive payment history will no longer be reported.

With a secured credit card, you have the potential to keep the card open for several years and even upgrade to an unsecured version of your credit card. Keeping your credit card accounts open, even if you only use the card occasionally, will help you increase the length of your overall credit history, which can have a positive impact on your score.

How is a Secured Card Different From a Traditional Credit Card?

A secured credit card is different from a traditional credit card because, like with any secured debt or loan, you have to put some collateral up. In this case, the collateral is the deposit you make, which creates your credit limit.

With a regular credit card, if you are approved, you receive a credit limit that you can borrow against each time you swipe this card. This credit limit is unsecured, which means you don’t have to make any deposits or put anything up for collateral.

Unsecured Credit vs. Secured Credit

Since traditional credit cards are unsecured, the credit card company will require you to apply, and this includes checking your credit. If your credit score meets their standards, you’ll get approved and can activate your card. If your credit score is too low, you will be denied, which indicates the card issuer is not confident that you will use the card wisely and pay your bill on time.

This isn’t anything to take personally since your credit score is just a three-digit number. Still, your credit score indicates how responsible of a borrower you are. If you’d had issues paying bills on time in the past or are just getting started and have no credit history, it may be hard to qualify for an unsecured card.

This is when a secured credit card can come in handy. Secured credit cards are geared toward people with bad credit or a thin credit profile.

It’s generally easy to get approved for a secured card because credit checks aren’t always required. You usually just need to make a deposit of around $200 that becomes your credit limit. You can borrow against this limit and build a positive credit history by paying your bill on time.

Can You Build Credit With NetSpend?

NetSpend is a global payments company that is known for its prepaid debit cards. While NetSpend does offer some of the most popular Mastercard and Visa prepaid cards for unbanked consumers, they don’t currently offer a credit card product. This means that you, unfortunately, aren’t able to build credit with NetSpend.

Consider getting one of the secured credit cards mentioned above, like the Capital One Platinum Secured Credit Card or the OpenSky® Secured Visa® Credit Card, to help build your credit.

What is the APR of a Prepaid Card?

APR stands for annual percentage rate and is the cost you pay each year to borrow money via a loan or credit card that charges interest. Since prepaid debit cards are not credit cards, there is no APR. You simply load the funds you wish to spend onto the card and use it just like a debit card.

Secured credit cards will have a purchase APR, so keep this in mind when considering your options. The average APR for a credit card is around 17.87% but can go as high as 24% or more.

Your credit card’s APR can vary depending on the market interest rate at the time as well as your creditworthiness. Typically, if you have a lower credit score you may have a higher APR. Credit cards also sometimes charge different APRs for getting a cash advance or performing a balance transfer.

Credit Card APRs

What’s tricky is that some credit cards charge interest daily, so even if you have an APR of 17%, you may end up paying more interest if you keep a balance on your card regularly.

To avoid paying interest on your secured or unsecured credit cards, commit to paying your bill in full each month so you’ll only pay interest on the balance you keep after your monthly statement closes.

What Are the Disadvantages of Prepaid Cards?

Prepaid cards can be a solid alternative if you prefer not to have a bank account or want to limit your spending to only what’s on the card. Keep in mind, using prepaid cards has several disadvantages as well.

To start, prepaid cards can get expensive when you start adding up all the fees like monthly maintenance charges, reloading fees (to add money to your card), activation fees, and ATM fees. Some of these fees can be avoided or reduced.

For example, you may be able to avoid fees associated with reloading your card by setting up direct deposit. You can also select a prepaid card that may waive activation fees. All of this can be a lot to keep up with though.

Since prepaid cards are not tied to a bank account, you won’t be able to write checks if that’s something you like to do. Also, prepaid cards typically come with fewer fraud protections than do credit cards. They also don’t report payment history to any credit bureau, so they won’t help you build credit.

How Much Money Can I Put on a Prepaid Card?

There is a limit to how much money you can load onto a prepaid card each day and sometimes a limit to how much you can spend. Most prepaid cards allow you to load anywhere from a maximum of $500 to $15,000 onto the card per day. This is a wide range, so understanding how much your prepaid card company will allow you to load onto your card per day is important.

For example, with the PayPal Prepaid Mastercard®, you can transfer up to $300 per day or $2,000 per month from your PayPal account to load your card. But you can deposit as much as $2,500 cash any day in-store. Worst case scenario, if you try to load too much money onto your prepaid card at once, you will be notified, and the transfer won’t go through.

Netspend Reload Terms

All prepaid cards limit the amount you can reload onto the card. This amount can greatly vary between cards, so be sure to read the cardholder agreement before choosing a card.

With a secured credit card, you prepay for your credit limit by making a deposit. This deposit can be as low as $99 or as high as several thousand dollars. This means that, if you want a higher credit limit, you can make a larger deposit.

Sometimes, the credit card issuer may give you a required deposit amount when you sign up. This could depend on factors like your income and work history. To build your credit with a secured credit card, you should try not to spend more than 30% of your credit limit each month.

This means if you open a secured credit card account and deposit $500 for a $500 credit limit, you should keep your spending below $150 per month and try to pay your balance off or at least pay the minimum when the bill is due.

Can I Earn Rewards on a Prepaid Card?

Yes, many secured credit cards now provide you with the opportunity to earn rewards. The Bank of America® Customized Cash Rewards Secured Credit Card and the Discover it® Secured Credit Card both allow you to earn cash back per dollar spent.

Discover credit cards have no annual fee and always offer generous cash back rates. This includes the Discover it® Secured Credit Card. Discover also matches your cash back rewards during your first year.

Discover it® Secured Credit Card Review

at Discover Card'ssecure website

SECURED RATING

★★★★★

4.5

OVERALL RATING

3.7/5.0
  • No Annual Fee, earn cash back, and build your credit with responsible use.
  • Using your secured credit card helps build a credit history with the three major credit bureaus. Generally, prepaid and debit cards can’t do that.
  • Establish your credit line with your tax return by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Discover is accepted nationwide by 99% of the places that take credit cards.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
10.99% for 6 months
22.99% Variable APR
$0
New/Rebuilding

Some prepaid debit cards offer rewards as well like the Brinks Prepaid Mastercard. A prepaid rewards card is not super common, but it can be nice when you find one that allows you to earn rewards.

The best credit card rewards are going to be obtained through unsecured credit cards that often require a good or excellent credit score. If you’re interested in earning better rewards, like points you can use for travel and merchandise but don’t have a good credit score to qualify for an unsecured card, start with a secured credit card to improve your score. You can always try to upgrade to an unsecured card a year later after making on-time payments and using your secured credit card wisely.

The Bottom Line: Prepaid Cards Don’t Build Credit

Prepaid cards don’t build credit and shouldn’t be confused with secured credit cards. Both options provide a completely different solution.

To build good credit, you need to make sure that you’re paying a bill that gets reported to each major credit bureau — Experian, Equifax, and Transunion — monthly.

The secured credit cards highlighted above are some of the best options to start with as you try to build your credit and create a positive payment history on your credit report.

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