Choose a Prepaid Credit Card to Keep Out of Debt
Many of us have been in this boat far too many times, and I’m sure amongst those that have taken out a credit card in the past, always end up regretting it later on down the line. Especially as a naive student, who thinks a credit card is free money, only to end up getting hit with late fees, interest charges and even defaults because they have reached and exceeded their limit.
So, for the generation of students now is there a safer option for them? Well, yes there most certainly is, and that safer option comes in the form of a Prepaid Cards which act the same as credit cards. Just without the borrowing of any money. If you tend to overspend or would like to control your spending then prepaid cards are the answer you have been looking for.
So how do they work?
The concept behind the prepaid card is pretty simple. Like a standard credit card you will be provided with a card that can be used in ATM machines, as well as for online purchases, and also stores around the country. However the money on the card has to be topped up by you, so you can only top up what you can afford without the facility of getting into debt and suffering from any charges or interest on your account.
Those with bad credit
This is where the prepaid card really comes into its own. Whether you have no credit history, or a bad credit rating you can still have all the advantages of a credit card by applying for a prepaid card which doesn’t require credit checks as there are no risks from the issuing company. As you don’t borrow money, there is no need to check your report.
Are they safe to use?
Just like your normal credit card, the prepaid card has enhanced security measure to help prevent fraud, and they all come with the latest Chip & PIN technology so they really do act like a debit card/credit card.
The disadvantages of the credit card
With credit cards, they act as a great way to build up your credit rating and are the ideal solution to paying emergency bills. That said, they can also completely ruin your credit rating and if you run into problems such as failure to pay back a minimum payment, or run into charges and high interest rates it could be a slippery slope to a debt filled future. Not only that but you will then struggle to build back your credit rating which then results into rejections for any future credit submissions (including mortgages, renting, loans, other credit cards and car finance).
With a prepaid credit card, none of this can happen.