A credit card isn't just a convenient, cash-less way to buy things. It provides authenticity on transactions over the phone or online. If you don't have a credit card, reserving a hotel, renting a car or opening an online account may be difficult. It's expected that adults have them.
When you're coming out of foreclosure, though, most people either aren't able to get a favorable card because of their credit history, or they prefer not to have the temptation a card brings. Prepaid and debit cards offer similar benefits, but they aren't the same thing and they do nothing to rebuild credit.
What is a secured credit card?
One option for someone who wants to rebuild credit is to get a secured credit card. The short description of a secured credit card is that, if you are approved for the card, you will pay a deposit up front. The deposit doesn't influence credit terms, but it provides security for the card issuer if you don't make your payments. Other than the deposit, it works just like any other credit card.
It's likely that you will have a low credit limit after foreclosure. A secured credit card is a way to rebuild credit and free yourself from the limitations of damaged credit. A recent column in Forbes suggests using a secured card for limited purchases with the sole intention of rebuilding credit. By making a single monthly purchase on a secured card - a subscription to Netflix, for example - you can rebuild your score by showing that you won't max out your credit line each month and that you can make monthly payments in full.
Protecting yourself through credit concerns
Depending on your credit score and personal preference, you can graduate from a secured card to a regular credit card as your credit stabilizes. There are many other details related to restoring credit, as well as how to defend yourself when facing foreclosure. A consultation with an attorney will help you to learn about foreclosure defense and credit options, whether you are facing foreclosure, midway through the process or rebuilding your credit after the fact.