Do Prepay Credit Cards Build Credit?

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Many people ask if prepaid credit cards build credit. The answer is no. Prepaid credit cards can be used like a major credit card to make purchases. The account for the credit card is opened with a deposit that is then the credit limit. The user can add more money to the card to increase the spending limit. Only the amount of money that is in the account can be spent. If the user tries to spend more than their limit the card will be denied.


Prepaid cards issued by banks and other government-regulated organizations are a new way for consumers to make payments and conduct other financial transactions. There are plenty of situations where a prepaid card might be the most convenient choice, but be sure you understand the key terms and conditions BEFORE you buy.

Many cards carry protections similar to credit and debit cards. To obtain these benefits, you must follow the instructions for registering and activating your card. Be sure to record your card information, including the customer service telephone number on the back of the card, so you can get a replacement if yours is lost or stolen.

Prepaid credit cards can be very useful for those who want to budget their money and for those who don't have a checking account or credit card. These types of cards generally charge a monthly maintenance fee and could charge additional fees for adding funds to the card and/or making purchases or getting cash.

If you have a problem with a prepaid card, first contact the customer service number. If the problem still isn’t resolved, you may want to file a complaint with the proper authorities.

If you have bad credit or no credit and want to build credit, try to obtain a unsecured credit card with a credit line from a subprime card issuer. Two examples of subprime financial lenders are First Premier Bank and Orchard Bank. Both of these banks report to the three major credit bureaus. If you get denied for a unsecured card then apply for a secured one. Secured credit cards are a great way to build credit if you cannot obtain credit elsewhere. Most secured credit card companies require a deposit equal to the credit line your are seeking. Make sure they report your payment monthly to the major credit bureaus. Making your payments on time monthly will increase your credit rating. You will also get your deposit returned or refunded to you after one year, turning your secured credit card into a unsecured credit card.

In conclusion, prepaid credit cards do not build credit, but are useful for on-line purchases and can be safer then carrying cash.

The above information was written in good faith but we cannot guarantee accuracy. If you would like to report a inaccuracy or if you feel you can add some valuable information for our readers, please email us at help@consumerbadcreditguide.com.