The most common type of credit card is pre-paid credit cards. These offer you a credit when you want to perform any action for which you have specific knowledge or a specific purpose – such as paying rent, getting a medical insurance to cover your medical expenses, paying an income tax, or taking care of your other financial obligations.
Prepaid credit cards are a relatively new form of credit card use. In the past many Americans relied solely on pre-paid credit cards to pay for necessities and buy groceries. Today all Americans, including college students and young adults, own credit cards. This poses dangers to many of the same worries of indebtedness and financial troubles that result from pre-paid credit cards – problems that have become widely accepted knowledge because of the success of the legislation.
Prepaid credit cards have become one of America’s most accepted methods of getting credit. In fact, pre-paid credit cards account for 40% of all consumer credit cards. Prior to the advent of the pre-paid credit card, the customer had to have some money from time to time to make their payment. They would have no access to savings or other financing sources of income.
Prepaid credit cards were popular because they offer you the option of not having to bring down late fees and the risk that if you do you end up paying a much higher rate of interest for the privilege or you end up being charged on an unsecured credit card which limits your credit to a specific amount currently available. The only exception to this is if you and your credit card company agree to pay it off entirely.
Many of you also may run into a few problems that keep you from using pre-paid credit cards. For instance, the payment method used can be set by the credit card company to one that is less expensive than the secured card. You may not have the exclusive ability with pre-paid credit cards to pay when you exceed the prime rate of the bank-sponsored credit card. Moreover, more people will be using pre-paid credit cards because of the convenience they offer for making purchases with these cards.
In the past, people had to get some pre-paid credit card in order to make their payments, but these days the banks have realized that just paying the minimum rate on their pre-paid credit cards can have a negative effect on their bottom line. It is a sad fact, however, that there are still a wide variety of pre-paid credit cards that will not cost you more than they already cost you. Most of these cards have even higher prime-rate credit cards for purchase transactions since they use the ‘golden hour’ of the credit cards’ interest rate.
A pre-paid credit card may not be the best option for you. Some people do not want to pay annual fees in order to obtain an unsecured credit card. They could still use a pre-paid credit card, however, but having difficulty in obtaining one of their pre-paid credit cards should probably be avoided.
The most common financial liability that pre-paid credit cards will have is those whose annual fees are often high (usually under hundreds of dollars) while they were on their pre-paid credit cards. If you do decide that getting pre-paid credit cards is a right financial decision, there are some steps that you can take to make sure that you do not get into a financial bind that you will not recover.
Most of the older cards have either an interest rate or some sort of grace period as a way of encouraging you to use the pre-paid credit cards. You will want to make sure that your payments are made on time every year, or that you make them past the grace period.
Another way of ensuring that you do not get into a financial bind that will result in you getting pre-paid credit cards is if you are unable to make payments on time. If this is possible, find a pre-paid credit card with a grace period that is near enough to cover the amount you have to bill each month.
Many cards that are accepted by banks have a maximum annual balance so that even though you may be paying interest on your pay stub or off term, this balance is still effectively enough to pay off your credit card.
Pre-paid credit cards are one of the first methods of getting credit. There are others, however, that you can easily use, such as a cash advance or secured deposit card that requires a bank deposit plus another annual fee, as well as a credit card that has to be used before a credit line or loan is established.
Pre-paid credit cards are not necessarily safer for your financial health than standard credit cards. Some have a high risk of allowing reckless financial behavior while accepting high rate of interest credit cards. The same may be said of loans that use conventional methods of payment – the amount paid each month is significantly higher than those given credit card companies.