In the times we’re living in, many people can easily attain consumer credit. People living in the United States are constantly finding themselves under a mound of debt that only seems to continue to grow. Being as much as $15,000 in debt is now more common than one might think.
People want a sure a proven way to improve their credit. This desire is certainly on the rise as people feel more and more pressure as they pile on more and more debt that they cannot afford. Going on a budget seems to be cruel and unusual punishment for many, as they often overlook the value of this system of financial planning. However, the use of a certain type of credit card may indeed help your credit and get rid of the idea that budgets are all bad.
In addition to being extremely helpful, these credit cards also provide consumers with bad credit, who’ve been denied traditional credit cards and bank account, a way out of their misery. It is common knowledge that here in the United States, there must be two people earning income in a household for a comfortable lifestyle to be maintained. Moreover, if two people are working outside the home, then who is left to do the budgeting and financial planning?
It is said that the way to run a marathon is one step at a time. Let’s take our first step by evaluating both pre-paid and secured credit cards and their pros and cons, particular to your situation.
Secured Credit Cards Pros – Opening a secured credit card account is a simple and affordable way to start building your credit. Secured credit cards will also help you improve and rebuild damaged credit. These cards are used exactly like a standard run of the mill credit cards you are familiar with.
Cons – A major disadvantage to these kinds of cards is that you have to put money down in order to secure them. There is generally some sort of deposit that is required with your application. Lots of people find this to be challenging. They also tend to have a much higher interest rate than a standard card, something like 15% or more and can charge you additional fees. In spite of these negative points, they can be answer for those looking to better their credit rating.
Pre-Paid Credit Cards Pros – Pre-Paid Credit Cards can be an excellent tool because they allow you the convenience of actually using your own cash, not borrowed funds. They look like the same credit cards that you see everyone else swiping, and can be used in all of the same places. In place of a credit card company determining what the limit on your card will be, you determine the limit on your own card. You simple “load” the amount of money you desire onto the card. Getting approved for this type of card is nearly a guarantee, even if you have credit problems.
Cons – If you are looking to rebuild or establish your credit however, beware. These cards may not report your repayment history to the credit bureaus. If the creditor does not report your account, this type of account will not help you improve your credit. By carefully selecting these cards, you can assure yourself that you receive the most bangs for your proverbial buck.
Remember also that pre-paid cards may not necessarily be accepted in all situation especially for hotel or car rentals. They also may not allow you to secure the reservation with on of these cards. To be on the safe side, always call ahead of time to verify that a particular vendor accepts the kind of card with which you wish to pay.
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