7 Signs That You've Outgrown a Prepaid Credit Card ...

If you're ready to build a credit history, it's time to switch from a prepaid credit card to an actual credit card. Because a prepaid credit card is a type of debit card, it doesn’t help or harm your credit score. The company issuing your prepaid credit card does not report to the credit bureaus. Therefore, if you're planning to buy a house or car, or if you want to improve your credit score, you're better off getting a secured or an unsecured credit card through the bank.

For the most part, a prepaid credit card can be used wherever Visa or MasterCard are accepted. But I've heard of gas stations not accepting some prepaid cards. This is a major inconvenience when a prepaid credit card is your only method of payment. This is rarely an issue with a Visa or MasterCard credit card.

If you prefer swiping plastic at checkout, why not get a credit card and benefit from a rewards program? Rewards programs are a nice fit if you’re paying off your credit card balances in full each month. Use your credit card for everyday purchases, such as dining out, gas, groceries and bills. You’ll earn a reward point for every dollar you spend, and you can redeem these points for gift cards, travel, merchandise or statement credit.

A credit card isn't a substitute for a savings account. It's always smart to save 10% of your paycheck for a rainy day. But if you’re unable to save at this time, a credit card offers peace of mind and provides emergency funds. However, you need a low-limit credit card.

With a prepaid debit/credit card, sometimes you have to visit an actual retail store to load money onto the account. This isn't always the case, but if your particular card requires in-person visits to a retail store, this can become a nuisance and an inconvenience. With a credit card, you’re extended a credit line based on your credit score and credit history. Money on the account is available when you need it.

Other than interest, most credit cards do not have fees, such as set up fees and annual fees. However, many prepaid credit cards charge an initial startup fee and a fee to load money onto the card.

When you apply for an actual credit card, you’ll enjoy a variety of perks. For example, some credit cards include trip cancellation coverage and car rental insurance when you use the card to book a reservation. A credit card also provides a convenient way to pay for things when traveling abroad; and when buying items online, your card may include insurance for Internet purchases.

You have to decide whether it's time to switch from a prepaid credit card to an actual credit card. Consider the pros and cons. And if you decide to get a credit card, research offers and choose a card that fits your lifestyle. What are other reasons to get a credit card?