Facts about Credit, Debit, Prepaid, and Secured Cards

Credit Card

A credit card is a card with a line of credit (borrowed money) that you can use to purchase goods or services on credit.

Debit Card

It is important to note that debit cards are not the same as credit cards.

A debit card lets you access your own cash that is sitting in a bank account. Basically just using your own cash that the bank is holding for you.

Debit cards ARE NOT as effective as credit cards because:

  • They are not a loan product so they can’t help you build credit.
  • They offer no or low rewards.
  • You don’t earn any interest on bank deposits. If you do, it’s usually less than 1%.
  • They’re less safe than credit cards

Prepaid Card

Prepaid card is also called a prepaid debit card, or a stored-value card. It is loaded with funds and can then be used by the cardholder to make purchases. The card may be intended for one-time use and can’t always be used for online purchases. Prepaid card may not be linked to a banking account, and users may not be able to build it to build up credit.

Secured Card

A secured credit card is a type of credit card that requires a deposit, and this deposit acts as collateral on the account, providing the card issuer with security in case the cardholder can’t make payments. Secured credit cards are often designed for subprime borrowers or those with limited credit histories.

Cons on traditional secured cards

  • They’re not particularly helpful in building up your credit profile.
  • They often have a very low credit limit.
  • By the end of the credit building process, credit card users will only be able to build good credit with a “low credit limit” history. It then takes another few years of flawless use to build up the credit.
  • They’re often high cost with no or low perks.
  • They offer low or no interest on secured deposits.

Learn more about secured credit cards click here

Credit cards from your home country

It is usually tempting to use a credit card from the country that you’re moving from. This is an easy option, however, it’s not the best for these reasons:

  • You will have no credit building ability here in the USA or Canada.
  • High foreign transaction fees.
  • Even if they are approved for use in the USA, they will be difficult to use because of a lack of a credit card user’s USA zip code (which is required for things like gas or online purchases).

Additionally, if the credit card is stolen, stolen, mistakenly, or over swiped, the user shall not be responsible, but the merchant or the credit card company. For these, it’s good to have a US-issued credit card.

To learn more about Citus Cards, please click here.

To find out more about your FICO Score, visit Experian.

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