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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.
If you have bad credit or no credit and want to build credit, secured credit cards are a great way to rebuild your credit. 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 you deposit returned 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.