Prepaid Cards

No, prepaid business credit cards don't build credit. Even when they're marketed to businesses, prepaid cards are not credit cards, as there's no credit line attached to them. Unlike a credit card, prepaid cards have their funds stored in a stand-alone prepaid account which you can reload. So you can only spend what you've deposited into your account. That's why they don't help build personal or business credit.

A secured credit card is a better option for those wanting to build credit. Secured credit cards do report to credit bureaus, so using them responsibly will help build your credit history. You don't need good credit history for a secured credit card, because your credit limit is simply how much of a deposit you're able to put down when you apply or open an account. Thus, the credit line is “secured” by the deposit. Some of the best secured credit cards are open to consumers as well, but small business owners can also apply for them. Secured business credit cards may also provide features specifically tailored towards businesses, such as employee cards with individual spending limits and more.

The main difference between prepaid cards and secured credit cards is that prepaid cards are actually debit cards while secured cards are truly credit cards. Most importantly, that means secured credit cards help cardholders build credit history, while prepaid cards do not.

It's common to confuse prepaid cards and secured credit cards because your spending with both types of cards is limited to the amount that you have on deposit. In the case of a prepaid card, you load money to the account and then use the card to spend that money. With a secured card, you have to place a refundable security deposit, and the amount you put down becomes your spending limit.

Prepaid vs. Secured Credit Cards

Prepaid cards are often used for budgeting, security (relative to cash), and convenience. Parents can open certain prepaid cards for children of any age, and these cards can be useful for teaching kids and young teenagers about money.

On the other hand, secured credit cards are open to people with bad or limited credit, so they are often used for improving or rebuilding credit scores. You must be 18 or older to be the primary cardholder on a secured card, but some card issuers will allow you to be added as an authorized user at any age.

Most prepaid cards allow recurring payments. For example, RushCard, Green Dot, Walmart MoneyCard and NetSpend all have recurring payments.

The Green Dot Prepaid Card has a $400 daily ATM withdrawal limit, on par with other prepaid cards. You may withdraw up to a maximum of $3,000 per calendar month from ATMs and up to a maximum of $3,000 per calendar month from teller transactions.

In addition to that, the Green Dot Prepaid Card has a $10,000 maximum balance limit, a $3,000 daily spending limit.