Many people get confused about the difference between a debit card, a credit card, and a secured credit card. There are differences that you should understand so that you are doing your best to manage your money and improve your credit score.

One of the best ways to improve your credit score is through the use of a secured credit card. Most people who have poor credit and want to rebuild it use a secured credit card. They are usually not eligible for a standard credit card but can get a secured card by giving money to the company to hold for them in an account. The amount of money held establishes your credit limit but you still have to pay monthly for any charges and accrued interest if you carry a balance. Every transaction is reported to the credit agencies and that is how you can begin to improve your credit score.

Eventually, if used wisely, this can become a standard credit card and your deposit money will be returned to you in addition to accrued interest. A debit card is simply an extension of your checking account. The money spent is withdrawn from your account similar to writing a check. None of these transactions are reported to the credit bureau, so a debit card does not help raise your credit number.

Similar to a debit card, a prepaid debit card will not help your credit rating either. If you desire to increase your credit rating, and it is too low to qualify for an unsecured credit card, a secured credit card is the way to go. If you simply need to manage your money and have the convenience of not having to carry cash, a debit card will work well for your needs.

1. Your Questions About Credit Cards | Credit & Debt Says:
   January 10th, 2012 at 5:49 pm

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