Choosing among different types of credit cards is confusing, especially with credit cards like prepaid cards. Here’s everything you need to know about prepaid credit cards and credit cards so you can know the differences and choose the best option for you.

Prepaid credit cards

Prepaid credit cards might be confusing because they are like a debit card or a gift card. With this credit card you will pay no interest; the spending limit is set by the amount you put into the credit card. This card is not linked to any bank account and the process is fast. This type of card is great if you are trying to keep a budget or even if you are traveling to keep track of the money you spend. On the other hand, you should keep in mind that this credit card does not affect your credit score, so it won’t help with your credit history and you might have to pay some kind of fee (reload, ATM withdrawal, etc.).

Credit cards

When it comes to credit cards, the moment you use them, you are borrowing money from the bank, so you will have to repay that money and pay interest on it if you are not careful. The best way to use them is to repay the full amount in your balance every month to avoid paying interest. On the other hand, regular credit cards offer you a bigger credit limit and they affect your credit score, which means that if you keep healthy credit habits, your credit score will go up and you will be able to access better loans and credits in the future.

In conclusion

Prepaid credit cards are not bad, but they won’t offer you any financial advantage other than helping you budget to keep control of your finances. Credit cards can be as good or as bad as you make them. They will affect your credit score depending on the way you use them.