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I have this e-mail that the definition between prepaid and secured.

I wonder if a secured credit card is distinguished from a regular credit card. I currently have a prepaid card, but some hotels and car rentals recently turned me, when they have recognized the prepaid card. I can only really want the credit card for hotel and rental car use, as well as the reconstruction of my credit card.

My answer:

Prepaid Card DEFINITION

Canadian Prepaid CCs are not technically credit cards. Do not offer you any credit and you do not have to apply for a loan to get is. Also, the issuing company does not have to pull a credit report from Equifax office in Canada or TRANS UNION Canada to see if you are credit worthy.

Prepaid cards are really glorified debit cards and they are not necessarily to your bank account. You can use the Visa or MasterCard logo on them.

Here is how they work ... You money in the card, say $ 500. You can then transfer money to the card until it is all finished. It is like a type of unsecured credit card vice versa.

There is no credit limit, and you have to "refill" the card back to them again.

The nice thing about a prepaid credit card is that you never use debt.

HOW HOTEL "TRANSACTION possesses" WORK

NOTE: In this example, credit cards, no debit / prepaid card

In answer to the question of the e-mail, why hotels do not accept a prepaid credit card ... Hotels and restaurants are usually preapprove a credit card to see if it has sufficient available credit line before making the map.

Example: You would like for 2 nights at a $ 100 per night in a hotel. 100 x 2 = $ 200 taxes x15% = $ 15

I have a few hotels and they said they would hold a 2 nights a credit card for $ 150.00 per night. A total of $ 300. This night may hold for any overages such as meals, rooms or the movies.

I have my credit card and she asked what happens if a hotel or restaurant will be a "hold" on your credit card.

Let's say you had $ 500.00 on your CC at the time your reservation at the hotel were. It would be a temporary possession of $ 300 on your credit card. Your available credit limit to $ 300 to only $ 200.

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I believe that the hotel does not keep to a pre-paid credit cards. In the same example: If you receive a $ 500 limit for your prepaid credit card, and tried to book the same hotel for $ 300, you would still have the opportunity to give that $ 300, since it is without consequences for these funds. There is no way for the hotel to these resources for themselves.

CORRECTION: I have interchanging the terminology "PREPAID CREDIT CARDS WITH CREDIT CARD SECURITY" "

I just wanted to point out that I've been interchanging the terminology prepaid credit cards with secured credit cards. While we offer a secured credit card Capital One on this site, it is not the same as a prepaid credit card.

CREDIT CARD SECURITY DEFINITION

A secure CC is a real credit card, where you have a true credit line. This credit line is represented by a cash amount that is in the possession of the creditor until the end of the Credit Agreement.

Example: The Home Trust Visa card has a credit of $ 1000 This map requires that a deposit of $ 1000 as security for the border.

Once that is, use the $ 1,000 limit, such as a credit card. Use it to pay them, pay interest on the balance etc. The credit limit will remain in force, even though you had him.

Since a secured credit card is a real credit card, it reports as a real credit card Equifax Canada and TRANS UNION Canada. This allows you to rebuild your credit score with the credit bureaus.

Lorée Monty is the founder of the http://www.canadian-money-advisor.ca Canadians better understand their money will help, credit and financial industry in Canada. I am currently writing secured credit cards and prepaid credit cards in Canada to answer some questions that have been raised on my website. Learn more about prepaid credit cards Canada, Canada secured credit cards