Myvesta News Release

Regular Credit Card Has More Perks Than Prepaid Card

Q: For many decades I have kept my debt at less than 16 percent of my net income, without the use of credit cards. When I paid off my debt, that percentage went into Series E bonds.

Now I would like to find a credit card (prepaid, of course) that acts like an interest-bearing checking account without all the fees and hoopla that surround the current crop of plastic. Most financial institution officers that I have talked to about this (if they don't laugh outright in my face) go into long-winded promotions for their "card du jour." Can you help me?

A: You are to be commended for being so careful about debt. Now that you want a credit card, why choose a prepaid one? If you get a regular credit card and pay it in full, you will have free use of the bank's money for 30 days. Choose one with no annual fee, and maybe some perks like cash rebates or free gasoline, and you'll be ahead of the game.

If that doesn't appeal to you, some major retailers and credit card companies offer prepaid gift cards, which are the equivalent of plastic gift certificates. Or you can consider a secured card, where you put a deposit with the bank in exchange for a major card. In fact, you may have to start with one of these cards since you've avoided credit cards in the past and don't have much credit history. Also check with your local bank or financial institution about getting a major credit card without a security deposit.

Q: I was turned down for credit, and one reason was "too many inquiries." How long do inquiries stay on my credit report, and how can I get them removed?

A: Inquiries are notations showing that someone has looked at your credit file. Under the Fair Credit Reporting Act, creditors must tell you who has looked at your report in the past two years for employment reasons, and the past six months for any other purpose. All inquiries are generally reported for two years, but most creditors are interested in those in the past six months. Keep in mind "promotional" inquiries (used for preapproved credit screening) and consumer inquiries (when you look at your own report) are not disclosed to anyone except you.

You can't get inquiries removed from your report. If you are a victim of credit fraud, however, you can ask the credit reporting agency to suppress those inquiries so they won't count against you.

Have a question for Steve? Visit Myvesta.org online. Steve Rhode is a money coach and president of the nonprofit consumer education group Myvesta.

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Myvesta^SM is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta.org online.