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Tags: finance, credit, benefits of prepaid credit card
 Credit cards are usually the first thing that people grab when they are paying for a purchase at any store. It’s easy to get, you don't need to have cash with you, and they are accepted in almost all retail establishments which makes them quite handy when you get the urge to splurge on something.
While the use of these cards has been on the rise, this has resulted in an alarming increase in the number of credit card debts in the country. The reason is because of the ease of use. One can use the credit cards anywhere and because you don't see any cash leaving your pocket you have no compulsion to control your spending habits nor even bother to think if you can afford the payments.
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This will hit home once your credit card bill arrives in the mail. To prevent this scenario from playing out and to make your life relatively debt-free if you had to use a card for purchases use prepaid credit cards instead. By using them you will be debt-free for your transactions in the sense that at the end of the day you wind up using your own money, not just in its physical form.
The prepaid credit cards has the same feature as an ordinary credit card in terms of purchasing power. You can use it in grocery stores, convenience stores, hotels, airline companies and other establishments that accept regular credit cards. I advice its use because you will avoid having to pay interests on your purchases.
In prepaid cards you deposit money in what is for all intents and purposes an escrow account. When you use the cards to purchase good and services the money you spent is taken directly from the escrow amount that you had deposited. Once you use up that amount the card will not be honored anymore until you recharge it with cash again.
It helps in financial planning and at the end of the month you don't get any bill that shows high interest rates that you need to take care of. You can open a prepaid credit card account in most banks or financial institutions. You can also open an account in some major stores and through online application.
When you do open an account you may pay an annual service fee and there may be other additional charges involved. These fees may vary depending on where you opened up the account. The benefits of prepaid cards can be seen in terms of not having to pay huge interests on your purchases.
Most people build up huge debts because of the high interest rates charged by the financial institutions handling their accounts. Prepaid credit cards teaches you to control your purchasing habits. Since the amount you are able to spend is based on the amount that is deposited in your account you can't really overspend.
Once you’ve already used the deposited amount you would need to top off the card with another amount before you can use it again. The purchase limiter is inherent in the card. I myself advocate the use of such prepaid credit card. You’ll be able to control your debts if you’ll just stick to it.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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