Not too many people enjoy being in debit. The stresses and strains of managing the debt can be significant and ultimately very depressing. Given that many people may feel that their credit card is one of their major sources of debt concern, it therefore may be of interest to know that there is now an alternative where the accumulation of debt is impossible – the prepaid credit card.
A prepaid credit card isn’t actually a credit card at all – it is a prepaid card – but is often given this name as it so closely resembles a credit card in the flexibility it may give you.
Credit cards v. prepay cards
If you have a credit card, you’ll know that you have a credit limit. That basically means that by using your card, you can in effect borrow money up to a specified amount (the credit limit).
This is then repaid on a monthly basis. If, as many people, you find you are unable to repay the amount in one payment, you can pay it off over several months by making a minimum payment each month. The card issuer will typically charge you interest on the outstanding balance (i.e. debt) until it is paid off.
This method of using borrowed money may work very well in situations where you are in regular employment and have income to meet the monthly minimum repayment requirements but if things change, you may suddenly find that you have debt on your card that you simply cannot deal with.
Yet in today’s world, just abandoning your plastic card may not be quite as simple as you may think. Through the internet and even many sales outlets such as automated ticket machines, it is now difficult or at times even impossible to pay via cash or cheque – a piece of plastic is needed.
That is where having a prepay card may save the day!
A card without debt
These types of card are typically available from online specialist providers.
They work on the very simple principle that you load them with credit through some form of cash transfer (many forms such as direct bank credits or PayPoint machine top-ups are typically supported). You then can use your card just as you would a standard credit card but you can only spend up to the amount you have loaded onto the card. Running up debt becomes impossible.
You can even have your salary paid directly onto the card, which means that you can’t spend more than you earn!
This type of card may also be ideal for using with children that are out-and-about on their own. It’s a great way of giving them spending money that’s a lot more secure than cash in their pockets.
A prepaid credit card may make your life a lot simpler, leaving you feeling more in control of your spending.