If your credit record is poor and cannot get a normal credit card, then a prepaid credit card is your best bet.

Though prepaid credit cards are accepted at any regular retailer that carries the credit card logo, they are not a ‘credit’ card in the normal terms, since the issuer does not extend you any credit facility. Instead your spending limit depends on the amount of money you carry on the credit card at any point of time.

After the amount on the card is exhausted, you can either purchase another prepaid credit card or opt to transfer money to another card you hold, based on the nature of the card program.

Though prepaid credit cards resemble debit credit cards a lot, the two are vastly different. When you use debit cards for any purchase, your shopping will be automatically debited from your bank account. On other hand, the purchases made with prepaid cards are deducted from the balance present on the card.

The prepaid cards offer various benefits like:

Interest-free purchases

People with a bad credit history are eligible to apply for a credit card.

The credit limit varies according to the balance available on the card.

However you should still read the terms and conditions of the application form, since prepaid credit cards can charge:

Monthly subscription fee

An application fee

A shopping fee

A monthly transaction limit fee that is charged if you spend more than a predetermined amount.

A fee for making ATM withdrawals.

In spite of all these fees, this card is ideal if you cannot get a normal credit card or do not want to pay the heavy fees and interest charges for the regular credit card.