credit cards

5 downsides to prepaid debit cards

Difficulty building credit history
Next
4 of 7
Back

Prepaid debit cards look like credit cards, but there's one key difference. They usually don't log your credit histories.

"Very few cards offer this service," Martindale says. "If they do, they charge unbelievable amounts."

Many card companies claim they will report your history to the credit bureaus, but don't. Others actually report to an alternative credit reporting service, such as PRBC, or Payment Reporting Builds Credit, but not to the major bureaus. "So there's little or no benefit," she says.

What's more, you're not building a relationship with a bank. "Think about the short term and the long term," Jackson says. For example, prepaid debit card companies usually don't offer additional accounts, such as savings accounts, that can help you to grow assets.

"The cards are mainly transactional tools," Jackson says.

Instead, think about getting a secured debit card. It's backed by deposits you make to a bank, and it can help you build a credit history.


 

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 15.66%  0.01 15.67%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.87% --0.00 10.87%
 
Search
advertisement
CREDIT CARD WEEKLY NEWSLETTER

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

advertisement

Blog

Jeanine Skowronski

Smartwatch app answers: Which card?

A smartwatch app from Wallaby Financial can recommend what credit card to use based on rewards, balances and credit utilization.  ... Read more

Partner Center
advertisement

Connect with us