Build Credit with a Prepaid Card?

A question that shows just how confusing the different types of credit and debit cards can be. Although most do not, some can help to build credit. Credit cards like Discover, Chase, or Citi represent a loan each time you use this type of card, you are actually borrowing money. Debit cards are issued by banks and are typically tied to a checking account. When you use a debit card, the amount is taken out of your checking account, no credit building. Although prepaid credit cards are not linked to a bank checking account, are very similar to debit cards. With this card you transfer money to the card, either deposit or online, and then can use the card anywhere. Prepaid cards do not represent a loan like a credit card, so you can only spend the amount you have already chose to put toward the card. And for this reason prepaid cards typically do not help you build your credit. This type of card is often referred to as prepaid credit cards or prepaid debit cards.