The Pros and Cons of Pre-paid Credit Cards
A prepaid credit card can be a great way to limit your spending. It works more like a debit card, or a pay-as-you-go mobile phone. You simply top it up with however much you want to spend and you avoid going into debt by spending more than you can afford. You can take out a prepaid credit card from some banks, credit card companies and even supermarkets. The Debtsolver team have compiled this list of the pros and cons associated with prepaid credit cards to help you decide if they could be a solution to your mounting debt problem.
First of all, a major benefit of the prepaid credit card for those in debt is the ability to get without first having to go through a credit check. If you don’t want to provide any personal information, or you think your bad credit history would prevent you from taking out a credit card, they can be a great alternative.
Prepaid credit cards can be used at anywhere that accepts the brand of card you’ve gone for. You can use them to sign up for those sites that need a credit card rather than a debit card too, like payment services, shops and online auctions.
The main benefit of the prepaid credit card is the added control it gives you over your spending. Since you have to load the card, you have a much better sense of the value of the money you’re spending. It makes a big psychological difference to a credit card that gives you the idea that you can just buy now and pay later. You’ll find it far easier to keep track of the amount you’ve spent and as you need to know what you’ve got left on the card, you’ll keep better track of your spending. Put simply, you can’t spend what you don’t have, which can be a primary cause of debt problems.
There are drawbacks though. Although it can be seen as a benefit that you don’t have to provide any personal information in order to take out the card, there’s very little protection if you lose the card it’s stolen. Keeping a record of the card number, the company that issued the card and their phone number will allow you to report the loss. Don’t keep this information in your wallet though!
Often, the amount you can load on to the card can be limited. Obviously, if this isn’t as much as you think you’re going to need, this can be a substantial disadvantage of the prepaid credit card. However, this can also limit your spending, which might not be such a bad thing.
There are fees associated with prepaid credit cards but these will generally be paid up front. There are those that charge a small fee each time you use the card so make sure, as always, that you read all of the small print before taking one out.
If your level of personal debt is cause for concern, a prepaid credit card can offer some security in helping you to manage your spending. Visit www.debtsolver.co.uk for more ways to solve your debt problem.
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