Ever since the first credit card was created, the number of people using credit cards has risen exponentially, in fact today it is impossible to carry out even the most basic tasks like online purchases, online ticketing and travel reservations, without owning a credit card. Such is the importance of having a credit card, however some people find themselves struggling without a credit card, the reason could be because they have poor credit history or simply because they have a had a bad experience with credit cards in terms of overs spending.
In either case there is hope for credit card users, who cannot get a regular credit card; the solution has been around for a long time with mobile phones, just like mobile operators offer prepaid and post paid connections, similarly there are now prepaid credit cards available. A prepaid credit card is a credit card where the owner of the credit actually pays money to the issuing bank or organization before he uses the credit card. So in essence it does not really matter if the credit card user has a bad credit history, because anything the user buys, he buys using his own money. There are a few major advantages of prepaid credit cards, the first is that it is very difficult to get into debt by using a prepaid credit card, in fact prepaid credit cards are a great way for a person to get out of debt, the second is that prepaid credit cards can actually repair a bad credit rating. Above all the most popular advantage is that prepaid credit cards do not charge any interest rates unlike a regular credit card.
Repairing bad credit rating using a prepaid credit card
The first thing any prepaid credit card owner has to do, is to verify if the prepaid credit card he is using is reporting to the credit bureau, not all prepaid credit cards actually report their transaction history to the credit bureau. So it is essential that the prepaid credit card owner make sure that his credit rating is improving by making sure the prepaid credit card is reporting to the credit bureau. Once the user verifies the prepaid credit card is reporting to the credit bureau, one can use the card without any fear of negative balance, as the moment the cash deposit runs out, there is no way the user can overdraw. This means that every transaction will be reported as paid in full and this will help the user repair his credit card rating over a period of time.
Using prepaid credit cards to get out of debt
Prepaid credit cards are perhaps the best way to get out of debt, people often claim that they can’t get out of debt because they have to use a credit card to complete even their basic day to day activities, and more often than not the reason they get into debt is because they loose track of how much they have spent. This is a common mistake more and more people are making everyday, the solution once again is using a prepaid credit card, if one has to have a credit card; then the best option is to go and get a prepaid credit card, this way there is no way the user can actually overspend in any way, as the moment the balance runs out the card will stop working, this ensures the prepaid credit card user knows at all times how much he has spent. In addition a user can actually allow for better budgeting of his money by keeping tabs on the credit card expenditure, thus making savings. Also prepaid credit cards do not charge interest rates as the user is using his own money and not the bank’s money, therefore the user is making savings on every transaction he carries out.
As the saying goes “A penny saved is a penny earned†once a person starts making savings by using a prepaid credit card, he can then start using that money to pay of his existing debts, so in essence by making a smarter and informed decision about which credit card to use, the user is getting out of debt, while not denying himself the advantages that come with a credit card.
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