A lot of transactions depend heavily on credit cards. Examples are hotel and flight bookings, online shopping and so forth. A lot of people are wary about credit card use. This is because they are well-aware of the fact that each charge translates in to credit card debt. However, since credit cards are a necessity, they have no choice but to get them.

But this is not the case for those with bad credit. This is because even though they badly want credit cards, they do not have good qualifications. Other people practically own 12 credit cards. But this is because they have an acceptable credit score. Those with terrible credit rating do not usually get accepted for the major credit cards.

But this is not the end for them. As much as there are credit cards for the privileged, there are credit cards for bad creditas well. These cards are prepaid credit cards and secured credit cards.

Prepaid Credit Cards

Prepaid credit cards, as the name suggests are somewhat paid for beforehand. This is because one must deposit an amount of money first like a savings account. Upon payment, he is issued with the prepaid credit card. After which he can use the card just like he would with other major credit cards. And then, the charge will just keep on deducting from his deposit. When his deposit runs out, he simply has to reload or deposit again.

Using this type of credit card frees a person from monthly credit card bills. There is not any risk of penalty charges as well. At a glance, this card works like a debit card. Only that at every deposit, a credit card holder pays a fee. Upon application for this card, he has to pay for an application fee as well.

Secured Credit Cards

Just like a prepaid credit card, a secured credit card requires a deposit. But the difference is that this deposit isn’t reduced at every charge. Instead, when the holder fails to pay his credit card bills, this deposit will be used to pay for the balances. Usually, the credit card provider waits until 5 to 6 months of late payments. Only then it will deduct from the deposit.

This card then does not exempt a user from credit card bills and penalty charges. However, it does secure the credit card provider of his investment. There is also an application fee and annual fee asked of from this credit card.