A form of credit card known as a prepaid credit card has a credit limit that is determined by the amount of money that has been deposited into the associated account. It functions in the same way as a traditional credit card, except rather than using credit to make purchases, account users make purchases using money that they have already loaded onto the card.
Therefore, it cannot be compared to a credit card. Even if a person has terrible credit, there is still a chance that they may qualify for a prepaid credit card. However, it is possible that they would not be authorized for a conventional credit card.
As a consequence of this, it is often used as a means of creating good credit. A borrower may demonstrate that he is financially responsible by routinely making modest charges and then paying those charges off in full at the end of each month.