http://www.debts.org/index.php en info@debts.org Copyright 2008 2008-12-01T15:28:00+00:00 http://www.debts.org/11/index/prepaid_card_vs_credit_card/ http://www.debts.org/11/index/prepaid_card_vs_credit_card/#When:12:13:00Z Bad credit solutionThere are many reasons why prepaid cards offer the best alternative to credit cards. Perhaps the greatest benefit is to those who have a bad credit history and are unable to obtain a credit card. Bad credit credit cards come with sky-high interest rates, which someone in debt may not wish to entertain. Whereas a prepaid card gives the convenience of a credit card without the associated risk. More.... Young peopleA prepaid card can be a terrific way for young people to learn how to manage ‘plastic money’, which can help them avoid spiralling debt problems when they later have access to credit. Teens can either load money onto the card themselves for online shopping or trips to the mall, or alternatively a parent can transfer an allowance or emergency fund onto the card.SafetyShopping online is never 100% risk free but most sites are very secure. If your prepaid card is somehow lost, stolen or subject to fraud there is a limit to how much damage can be inflicted on your card. If in the wrong hands, your prepaid card can only be used in line with how much you have deposited on the card. A credit card however can give a thief access to thousands of dollars.Financial controlGetting out of debt takes discipline and a prepaid card can help you avoid over spending, which means you can escape debt quicker. As prepaid cardholder, you dictate how much money goes on the card. Whereas a high credit card limit can provide any number of temptations whenever you see something you’d like to splurge your cash on.Salary transferSome employers are happy to deposit wages onto a prepaid card. This is particularly convenient for people without a bank account. The money can be withdrawn at ATMs, or used for transactions online or elsewhere. No access to creditAll the money you will ever spend on your prepaid card will always be your own. This means if you need some extra cash to make it through to pay day or your refrigerator has gone on melt down, you cannot ‘buy now pay later’. Credit repairOne way to earn a more favourable credit report is to use credit. Using credit sensibly shows you are a) trustworthy and b) a lower credit risk than someone who has never borrowed. A credit card is one way to help fix your credit report because when managed properly, it assures other lenders you can handle credit. A prepaid card however, does not aid a bad credit problem because you are not using borrowed money.See our section on Credit Reports for information on how to avoid killing your credit score. Prepaid card vs Credit Card 2008-08-14T12:13:00+00:00