Prepaid debit cards have become increasingly popular as credit markets tighten and consumers search for alternative ways to manage their budgets. While prepaid debit cards provide all the flexibility of paying with plastic, there are some major differences you must take into consideration.
Unlike traditional credit cards, prepaid debit cards require a cash deposit into an account, much like a deposit you would make to a regular checking or savings account. And when the money is spent, there's nothing more to spend until you make another cash deposit.
If you're simply looking for the availability of direct deposit and the convenience of paying with plastic, a prepaid debit card might be the perfect fit for your financial needs. However, if you're goal is to build a solid credit history and improve your credit score, it's important to remember that most prepaid debit cards do not report to the three credit bureaus. Therefore, they will do virtually nothing to improve your credit standing.
