What's the difference between a credit card and a prepaid card? A credit card is a powerful financial tool which basically lets you get an instant loan and pay most of the loan off whenever you choose to. Using a credit card also helps you to build your credit history, and offers many other benefits. A prepaid card on the other hand does not let you spend money on credit, you have to add money into your card account and the money you add is what you use to make payments.

What is a prepaid card good for? If you prefer not to live on credit, then a prepaid card is the obvious choice. You get the benefits of a credit card like easy cashless payments, limited liability and often even rewards, but without spending someone else's money.

The prepaid card also wins if you don't want your spending behavior to affect your credit history. Since prepaid cards do not actually give you credit (you are using your own money) your spending and payments behavior is not normally reported to the credit bureaus. You also won't have to show proof of income or have a credit history in order to get one.

If you want to use a prepaid card to build your credit score, there are a few prepaid cards on the market that include credit reporting as an extra feature (some READYdebit prepaid cards include these features). However, if building credit is your goal, you will accomplish that a lot faster using a secured credit card. Like a prepaid card, you can get a secured card without any credit history just by putting down a deposit, but a secured card actually gives you credit, and reports your spending and repayment behavior to credit bureaus.

If you have bad credit but can't afford to put down a deposit for a secured credit card, then a prepaid card is your key to enjoying the perks of a credit card without tying up your cash in a deposit.

What's the difference between a prepaid card and a debit card? Because a debit card is linked to your bank account, if your card information is stolen then a criminal may be able to access your account. By using a debit card to make payments at retailers you may be putting your bank account at risk. A prepaid card provides a much safer alternative because it isn't linked to your checking or savings account, and nobody can steal more money than what you load onto your card.

On the other hand, if your credit card is stolen, the guilty party could spend your entire line of credit if you don't notify the bank quickly. You will have a maximum of $50 liability for fraudulent transactions when you report the credit card theft promptly (proving this can be difficult if the thief is a roommate or family member). Although many credit cards offer $0 liability. A prepaid card is also a safe option as far as cards go, as you get the same $50 liability for fraudulent transactions that you get with a normal credit card (many issuers offer $0 liability) and you get to choose how much money you keep on your card at any time.

Is a prepaid card a better option than a credit card? A prepaid card is a great stop-gap tool if you just need a card to make payments with. Many prepaid cards offer similar benefits to what you find on basic credit cards, while letting you make your payments up front and avoid debt. However, if you have good to excellent credit and are prepared to diligently pay your balance in full every month, you may find a credit card much more rewarding. Good credit cards offer much higher rewards or cash back than you will find on any prepaid card, and come with perks and benefits that can save you a lot of money.

Here are some of my favorite rewards credit cards:

Credit CardFeaturesIntro APRRegular APRAnnual FeeWhy we like itWe least likeCredit RequiredRelated links
Citi Rewards+℠ Card

Citi Rewards+℠ Card

APPLY NOWAt Citi's secure website
  • Earn 15,000 bonus points after you spend $1,000 in purchases with your card within 3 months of account opening; redeemable for $150 in gift cards at thankyou.com
  • The Citi Rewards+℠ Card - the only credit card that automatically rounds up to the nearest 10 points on every purchase - with no cap.
  • Earn 15,000 bonus points after you spend $1,000 in purchases with your card within 3 months of account opening; redeemable for $150 in gift cards at thankyou.com
  • 0% Intro APR on balance transfers and purchases for 15 months. After that, the variable APR will be 15.24% - 25.24%, based on your creditworthiness.
  • Earn 2X ThankYou® Points at Supermarkets and Gas Stations for the first $6,000 per year and then 1X Points thereafter. Plus, earn 1X Points on All Other Purchases.
  • The standard variable APR for Citi Flex Plan is 15.24% - 25.24% based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.
APPLY NOWAt Citi's secure website

0% introductory APR for 15 months on Purchases and Balance Transfers

15.24% - 25.24% (Variable)

$0

Excellent/Good
Citi<sup>®</sup> / AAdvantage<sup>®</sup> Executive World Elite™ Mastercard<sup>®</sup>

Citi® / AAdvantage® Executive World Elite™ Mastercard®

APPLY NOWAt Citi's secure website
  • Earn 50,000 American Airlines AAdvantage® bonus miles after spending $5,000 in purchases within the first 3 months of account opening
  • Earn 50,000 American Airlines AAdvantage® bonus miles after spending $5,000 in purchases within the first 3 months of account opening
  • Admirals Club® membership for you and access for guests traveling with you
  • Complimentary Admirals Club® lounge access for authorized users
  • Earn 10,000 AAdvantage® Elite Qualifying Miles (EQMs) after you spend $40,000 in purchases within the year
  • No Foreign Transaction Fees on purchases*
  • Earn 2 AAdvantage® miles for every $1 spent on eligible American Airlines purchases and 1 AAdvantage® mile for every $1 spent on other purchases
  • First checked bag is free on domestic American Airlines itineraries for you and up to 8 companions traveling with you on the same reservation
  • The standard variable APR for Citi Flex Plan is 17.49% - 25.49%, based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.
APPLY NOWAt Citi's secure website

N/A

17.49% - 25.49%* (Variable)

$450

Why we like it
  • Earn 50,000 American Airlines AAdvantage® bonus miles after spending $5,000 in purchases within the first 3 months of account opening.
  • Admirals Club® membership for you and access for guests traveling with you.
We least like
  • High annual fee.
Excellent
Capital One<sup>®</sup> QuicksilverOne<sup>®</sup> Cash Rewards Credit Card

Capital One® QuicksilverOne® Cash Rewards Credit Card

  • Earn unlimited 1.5% cash back on every purchase, every day
  • Earn cash rewards without signing up for rotating categories
  • Get access to a higher credit line after making your first 5 monthly payments on time
  • Monitor your credit profile with the CreditWise® app, free for everyone
  • $0 fraud liability if your card is ever lost or stolen
  • No limit to how much cash back you can earn, and cash back doesn't expire for the life of the account
  • Help strengthen your credit for the future with responsible card use
  • Get customized alerts and manage your account with the Capital One mobile app

N/A

26.46% (Variable)

$39

Why we like it
  • Earn cash rewards without signing up for rotating categories.
  • Earn unlimited 1.5% cash back on every purchase, every day.
We least like
  • $39 Annual fee.
Average, Fair, Limited
Avianca Vuela Visa<sup>®</sup> Card

Avianca Vuela Visa® Card

APPLY NOWAt Avianca's secure website
  • Standard 40,000 welcome bonus after first purchase, plus 20,000 bonus miles after at least $1,000 spend on purchases within the first 90 days of account opening (total of 60,000). Promo code SB4060 must be entered when completing application in order to receive the additional 20,000 welcome bonus miles after qualifying purchases.
  • Earn 3 LifeMiles per $1 spent on Avianca purchases
  • Earn 2 LifeMiles per $1 spent at gas stations and grocery stores
  • Earn 1 LifeMile per $1 spent on all other purchases
  • No foreign transaction fees
  • 15% discount on purchases of miles with Multiply Your Miles
APPLY NOWAt Avianca's secure website

0% intro APR for the first 12 months. Applies to BTs made within the first 90 days.

14.99% - 27.99%, based on your creditworthiness

$149

Excellent, Good
Avianca Vida Visa<sup>®</sup> Card

Avianca Vida Visa® Card

APPLY NOWAt Avianca's secure website
  • Standard 20,000 welcome bonus after first purchase, plus 20,000 bonus miles after at least $1,000 spend on purchases within the first 90 days of account opening (total of 40,000). Promo code SB4060 must be entered when completing application in order to receive the additional 20,000 welcome bonus miles after qualifying purchases.
  • Earn 2 LifeMiles per $1 spent on Avianca purchases
  • Earn 1 LifeMile per $1 spent on all other purchases
  • 15% discount on purchases of miles with Multiply Your Miles
APPLY NOWAt Avianca's secure website

0% intro APR for the first 12 months. Applies to BTs made within the first 90 days.

14.99% - 27.99%, based on your creditworthiness

$59

Excellent, Good
Credit One Bank<sup>®</sup> Platinum Visa<sup>®</sup> with Cash Back Rewards

Credit One Bank® Platinum Visa® with Cash Back Rewards

APPLY NOWAt Credit One Bank's secure website
  • 1% cash back rewards on all purchases, no annual fee, and a competitive APR are just a few of the benefits qualified applicants will enjoy, terms apply
  • With $0 Fraud Liability, you won't be responsible for unauthorized charges
  • Managing your account is easy with the Credit One Bank mobile app
  • Pick a card that fits your style. Multiple card designs are available, a fee may apply
  • Monitor your credit with free online access to your Experian credit score, terms apply
  • Never miss an account update with customizable text and email alerts
  • Do your part to help the environment with the option to go paperless
APPLY NOWAt Credit One Bank's secure website

N/A

19.99% - 25.99% (Variable)

$0 - $99

Why we like it
  • 1% cash back rewards on all purchases, no annual fee, and a competitive APR are just a few of the benefits qualified applicants will enjoy, terms apply.
Fair Credit
Credit One Bank<sup>®</sup> Unsecured Visa<sup>®</sup> with Cash Back Rewards

Credit One Bank® Unsecured Visa® with Cash Back Rewards

APPLY NOWAt Credit One Bank's secure website
  • See if you Pre-Qualify in less than 60 seconds-without affecting your credit score. It's fast, easy, and secure.
  • Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV. Terms apply.
  • This is a fully functional, unsecured credit card-not a debit card, prepaid card, or secured credit card with deposit requirements.
  • Credit One Bank evaluates every account for credit line increase opportunities. We'll let you know as soon as you're eligible for a higher credit line.
  • Take advantage of free online access to your Experian credit score and credit report summary so you can track the key factors impacting your credit health. Terms apply.
  • Zero Fraud Liability protects you if your card is ever lost or stolen. Rest easy knowing you won't be held responsible for unauthorized charges.
  • Access your account easily from your computer, smartphone, or tablet at CreditOneBank.com or the Credit One Bank Mobile App. You can make payments, see recent transactions, and update your account preferences all at the click of a button.
  • Carry a card that makes you smile by choosing from over 20 unique card designs in Credit One Bank's card gallery. A fee may apply.
APPLY NOWAt Credit One Bank's secure website

N/A*

19.99% - 25.99% (Variable)

$0 - $99

Why we like it
  • Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV. Terms apply.
Bad Credit
Credit One Bank<sup>®</sup> Platinum Visa<sup>®</sup> for Rebuilding Credit

Credit One Bank® Platinum Visa® for Rebuilding Credit

APPLY NOWAt Credit One Bank's secure website
  • See if you Pre-Qualify without harming your credit score
  • Track your progress with free online access to your Experian credit score, terms apply
  • Looking to rebuild credit? We report to the major credit bureaus monthly
  • Accounts are automatically reviewed for credit line increase opportunities
  • Make paying your bill easier with the ability to choose your payment due date, terms apply
  • Stay in-the-know with customizable account alerts via email and text
  • Receive 1% cash back rewards on eligible purchases, terms apply
  • Enjoy peace of mind with $0 Fraud Liability
APPLY NOWAt Credit One Bank's secure website

N/A*

19.99% - 25.99% (Variable)

$0 - $99

Why we like it
  • See if you Pre-Qualify without harming your credit score.
  • Make paying your bill easier with the ability to choose your payment due date, terms apply.
Bad Credit
Credit One Bank<sup>®</sup> Visa<sup>®</sup> Credit Card

Credit One Bank® Visa® Credit Card

APPLY NOWAt Credit One Bank's secure website
  • Find the card that's right for you without affecting your credit score.
  • Show off your personality by selecting from a variety of card designs, a fee may apply.
  • Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
  • Set up custom email or text alerts so you'll always be aware of your payment due date, when your payment posts, or if your available credit runs low.
  • Don't get stuck with a payment date that doesn't work with your schedule. Credit One Bank allows you to choose your monthly payment due date. Terms apply.
  • Take advantage of free online access to your Experian credit score and credit report summary so you can track the key factors impacting your credit health. Terms apply.
  • Credit One Bank evaluates every account for credit line increase opportunities. We'll let you know as soon as you're eligible for a higher credit line.
  • Know you're protected from unauthorized charges with Zero Fraud Liability—included with every Credit One Bank account.
APPLY NOWAt Credit One Bank's secure website

N/A

19.99% - 25.99% (Variable)

$0 - $99

Bad Credit