Understanding Prepaid Credit Cards

Understanding Prepaid Credit Cards

by Tina Porter

If your credit is poor or severely damaged then you are fully aware of how difficult it can be to obtain a credit card, even one that is secured. You also know that in this day and age it is a necessity to have one. Do not worry. There is a solution to this problem.
Prepaid credit cards can give you the spending freedom that you need without being bound by any type of contract. They are easy to set up and use. All you need to do is open and deposit money into an account with a company that offers them. You control what the limit is because you are the one supplying the funds.The amount you deposit is the amount you have available. You do not have to worry about receiving a monthly bill because you do not owe any money. You will not be charged interest or finance fees because you are not borrowing any money. There is no chance of you ever being late with a payment or going over the limit. Once the balance on your card reaches zero you will no longer be able to use it until you deposit more money into your account, which you do at your own convenience.

It is important to note that these cards also have several limitations. Technically, they are the same as debit cards with the exception that they are not tied to your personal checking or savings account. Your payment history is not monitored so your credit rating will never be affected by them. Also, many companies will charge you a fee to open or deposit money into a prepaid account with them. This fee is usually around $5 or $10. It would be cheaper to open a no cost checking or savings account that automatically comes with a free debit card. Finally, you may find that you are not able to use a prepaid credit card for reoccurring charges, such as a phone bill, Internet subscription, or cable bill. Many companies refuse to accept them for these types of transactions because there is always the chance that the money won't be there when it is time to withdraw it.

A Prepaid credit card works exactly like a normal credit card without all of the hassle. You have total control over every aspect of it, including the limit and availability of funds. While it will not eliminate the damage that is already done to your personal record, it will give you the freedom to purchase those items that you might not be able to buy with cash.

A problem called 'Credit Card Debt'

A problem called 'Credit Card Debt'

by sas_submitemail

Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds. However, the credit card industry and credit card holders are posed with a big problem called 'Credit Card Debt'. In order to understand what 'credit card debt' actually means, we need to understand the workflow associated with the use of credit cards as such.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you don't incur late fee but just the interest charges on your credit card debt. If you don't pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month's interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don't still control your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.

6 Questions and Answers on Credit Card Application

6 Questions and Answers on Credit Card Application

by Susan Rumbo

Nowadays the range of credit cards is so vast, that sometimes choosing the one can be quite confusing. In one particular case, why one credit card deal can be so different from hundreds of others? We are glad to suggest you six questions and answers. They will possibly help you to choose a plastic which does for you best.

1. Are you a student? Being a student, you are free to apply for a student credit card. It would be much better, of course. It is quite possible, that your application will be accepted without problems, no matter what your credit is. However, before an application, it would be better to contact to the bank where you are going to obtain a credit card.

2. Are you going to transfer your balance from a credit card to another one? In this case it would be much better to look for a plastic with low APR on balance transfers. APR is an abbreviation for Annual Percentage Rate, and it implies the total cost of your loan expressed as interest rate. Plastics with low APR on balance transfers may be very convenient; however, you still should be careful with these, as they represent a nice base for swindlers.

3. Are you going to make large purchases? In this case, pay special attention to the plastics with low APR on purchases. If you are really intended to make large purchases, you can also take advantage of bonus points which you can earn with every purchase. Moreover, pay attention to special grace period, which is different for various plastics. Grace period is a special period during which you may pay off your debt without any extra charges, or you do not have to pay at all, if you cannot. Usually this period lasts for 10-28 days.

4. Do you pay off your debt in full every time you get it? If a customer has enough money or your credit card is only for an emergency, he or she can pay off a bill in full every time he or she gets it. In this case, chose the deals with introductory APR of 0% or grace period. You will be able to pay off a balance not worrying about rates.

5. Are you ready to pay fees? In many cases the issuers charge various fees. And sometimes these can be really high. There are quite enough of them: annual fees, cash advance fees, balance transfer fees, foreign exchange fees, setup fees, penalty fees... Of course, not all of them are charged, but some (for instance, cash advance fee) are charges ALWAYS. Moreover, some issuers can charge a fee irrespective of the fact, that you do not use your plastic.

6. Do you need a good Customer Service? Sometimes this can be a quite important issue. In some cases, for instance, in case of loss of your plastic or if there is any charge you would like to contest, etc. you may need such a service. Moreover, you need a friendly and competent service. So choose the right bank with great reputation and with really nice customer service.

Careful Selection of Your Credit Card According To Your Needs

Careful Selection of Your Credit Card According To Your Needs

by Smith James

Credit card is an important shopping tool that takes care of your needs. It caters to your domestic and business purposes. And, of course, there are so many options of these shopping cards available these days that it is necessary for you to know what exactly the deal is that you are opting for. Do not jump at any attractive-looking offer from different companies, which many people tend to do.

This is because you could unnecessarily end up losing a lot of money. Some cards may be doing a popular round in the market. However, there has to be better guidelines to find out the credit card that suits one's spending patterns best. After all, everybody's needs are different, and there is a card out there for everyone. You can choose among the offers by checking them online and comparing them.

Check out all the necessary details about the credit card and how it can be useful to you. Take a stock of the transactions that you have been into. You should have your reasons clear as to why you want a particular card. You may be getting discount offers on certain items upon availing a particular card. However, check whether you are allowing yourself to overspend by purchasing things you do not quite require. Spend within your means and make payments of outstanding balances in time. This helps you avoid unnecessary waste of money, as in penalties.

It is definitely a better idea to go for a low-interest credit card if it is not within your budget plans to pay off the full outstanding balance each month. There are cards with extended credit limit and which help you avoid penalty, in case you surpass the shorter due date on other cards.