Prepaid Credit Card
Borrowing money used to be easy.
Your handshake and good name were all that was needed to obtain credit. These days, obtaining credit is difficult
and rebuilding credit can take years. An easy and convenient alternative to traditional credit cards is to
get prepaid credit cards.
Most financial institutions can help you get prepaid credit cards, and these cards are a convenient and easy way to
manage your money. Prepaid credit cards work like debit cards. You are required to give the company issuing your
prepaid card funds upfront. The amount you give them will determine how much you can spend on your card, or your
spending limit. The upfront money can be deposited into an account, such as a savings account that will earn
interest over time, or it can be paid as a lump payment to the institution directly.
Prepaid credit cards are secured and convenient like a credit card but without the risk. Unlike traditional credit
cards that have credit limits that are not based on the money you have saved or payments you have made to the
company in advance, prepaid credit cards draw from the deposit you made as your line of credit. The main advantage
is that even if you max out your spending limit, you do not accumulate debt or hurt your credit score. Once you
have spent the deposited funds, you will not be able to make purchases with the prepaid credit card unless you
increase your deposit.
Additional advantages of prepaid credit cards are that there are no credit checks associated with opening or
maintaining an account. There are no interest charges that will accrue, and there are no monthly bills to track and
pay. Prepaid credit cards are an ideal way to manage your money and ensure you do not overspend. However, be aware
that you may not be able to use a prepaid credit card for purchases where a set amount of money is deducted from an
account on a monthly (or periodic) basis. This is because such accounts require you to have a guaranteed pool of
money, and with prepaid credit cards the amount of money in them changes depending on your balance.
In these times where obtaining credit is challenging and the difficulty in rebuilding a poor credit score is
compounded by a bad economy, the ideal way to manage your money is to get prepaid credit cards. These
cards can be used all over the world where credit cards are accepted, and you can spend your money without the
worry of a looming bill at the end of the month.
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