Is Credit Card Debt becoming a global problem?
Credit Card Debt on the Increase
Most people are aware that a credit card is almost an essential element as far as enhancing spending ability in the modern age. Whether by accident or more probably by design, the credit card companies have made it almost a necessity for people to use their products in order to establish a credit history. This history is vital when it comes time for purchases beyond clothes and food at restaurants; in order to receive approval for loans for a vehicle purchase or financing, and to get a mortgage for the purchase of a house, people have to have some kind of credit history.
Moreover, for people who travel, credit cards are necessary in order to confirm hotel reservations or airline tickets. The use of the internet has added a whole new dimension to credit card use. Surveys show that people are showing an ever-increasing penchant for purchasing all or most of their goods via buying online, and most sites which sell products or services have only credit card options when it comes to payment.
Many people find themselves overextended and unable to make their monthly payments, and as a result find their credit history in need of repair before they are able to make any further purchases. When individuals who are leery of credit cards see these trends, their view of the credit card as a potentially lethal financial bomb are confirmed, and they are further committed to not using one for purchases. These people will find themselves at a disadvantage in the purchasing realities of today's marketplace.
Fortunately, several companies have created a solution that addresses the problem of the individual opposed to credit spending. Prepaid Credit/Debit Cards are an example of this solution. The prepaid card acts as a regular credit card; it can be used at all the same places purchases are made, including online. The main difference is that instead of spending on future money, the individual cardholder is spending money that they already have.
This is achieved when loading the card. People using a Prepaid Credit Card deposit sums of cash onto their card balance, either by paycheck or individual transaction. Once this balance is spent, there is no further spending allowed on the card until it has been reloaded. This way, individuals are spending only money that they already have, not money that they hope to have at a future date. This type of card is also ideal for individuals who have a poor credit score; they can re-establish their history without putting themselves in danger of more debt.
Unlike regular credit cards, generally, Prepaid Credit Cards do not have any APRs, annual fees, or overdraft charges. After all, what would be the point when it is money already earned by the individual that is being spent? Holders of these cards are entitled to all the benefits that normal credit cards holders share. Access to millions of businesses and thousands of ATMs worldwide are all part of being a Prepaid credit card user.
The main thing is to compare the prospective costs of each card against other prepaid cards and also traditional credit cards. The costs of prepaid cards should continue to decrease as the demand for them increases, and the market becomes even more competitive. Better deals for prepaid consumers will appear all the time.
But bear in mind that the lowest costs won't always be the best option. If you're in debt and need to cut up your credit cards to prevent you from sinking any deeper, slightly higher fees on the safety and flexibility of a prepaid card may be preferable to keeping your existing credit cards and being tempted further into debt.