Credit and Credit Cards
The start of the new year is a critical time for many people. No matter how careful you are you usually spend a little more than you had planned over the holidays and that leaves you trying to catch up in January. Credit cards are usually a go to strategy, but, for the person trying to get out of debt they might say, why not try a prepaid card. Let’s set the record straight about prepaid cards right here and right now.
Quite frankly, I have no idea why they exist because they are not there to benefit the consumer. From what I have seen they are there for the celebrity or the big bank to make more money. This is what I discovered about the prepaid cards:
- Monthly fees– Most cards have a monthly fee of $3.00 – $9.95. We were just screaming about bank fees the other day, so what is the difference between the prepaid card and a debit card?
- No chance to build credit as they do not report to the three major credit bureaus. Seems it is just like using your debit card.
- To be fair, they can be good for travel, teens, or for someone who is just fed up with banks.
Credit cards are here to stay and if you ever had one or many when you did not understand how to use them wisely, you probably went into debt over your head and probably are now without a credit card. Credit cards are useful, the key is to have a plan to pay off the bill in full each month or if over time, don’t maximize your credit threshold. Buy things that appreciate not depreciate. In other words if you buy a television that is a depreciating asset. On the other hand if you use it to start your business that is good. The key points here are that if you can’t get an unsecured credit card, go for the secured credit card and skip the prepaid card. tomorrow we will examine Secured credit cards.
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