Avoid Financial Strain with a Prepaid Credit Card

Prepaid credit cards are becoming more and more popular. As Americans find themselves stretched to financial limits, these cards have become a way to avoid overspending.

A prepaid credit card works just like a regular credit card, except you have to pay before you use it. Such cards are available everywhere and offered by most major card issuers. American Express, Master Card, and Visa all offer prepaid credit cards. They even look so similar to their brethren that it’s hard to distinguish the prepaid card from the standard credit card.

You can make any type of purchase you would normally make with a regular card, however, some restrictions due apply. Generally, you cannot use a such card for hotel accommodations, airfare, or auto rental, as these purchases require your card to attach to your name, address and personal information for obvious reasons. Your card is anonymous, is doesn’t attach to your name or personal information in any way. Also, gasoline retailers often restrict prepaid credit cards because of the drive-away syndrome.

A prepaid credit card is a good option if you are in tight financial circumstances. Because you pay ahead (load the card), you can’t really purchase beyond your means and there is no balance to carry forward.

Apart from the restrictions we have already discussed there may be associated fees for your prepaid cards. Such cards also come in many forms. At the rear of your Pharmacy or in Wal-Mart’s somewhere you will find a display featuring various prepaid cards. These are offered for preset amounts and you pay that amount plus charges at the cashier while checking out. You might purchase a $20.00 prepaid card from the display. At the checkout this card will cost around $25.00 because of associated fees. Once you’ve paid your $25.00. However, you’re done. There are no more charges and no fluctuating interest rates.

Other types of prepaid cards are one you can load to amounts you decide upon. These cards are usually issued by one of the Major credit card companies like VISA, or Master Card. You generally receive the card after applying for it and including your first deposit on the card. The card is issued to you and you can use it for anything up to the amount left in your account less fees for use. These cards allow you the option of refilling, or loading, your card whenever you want. While there are fees for using the card, they are pretty clear cut and you should check them out and no the costs involved before making an initial deposit.

Using either of these types of cards is a good solution to stop overspending until you get your financial situation ironed out.

Easy Ways to Trash your Financial Life

Timely payment of your credit card dues is a must for you to have a healthy financial life. Delay in payment for just one day can bring a huge penalty for your available credit limits. Beware not to cross the limit of 30 days. You may risk your whole financial life if you ever cross this limit even by mistake.

At times your credit card payment is delayed due to some confusion or a small financial problem. If this delay is not more than one or two days, you still have an option to contact the card issuer. You can manage to close the chapter by having a word with them and they may grant you a waiver of late payment fees.

But if the delay is more than the time limit of 30 days the penalties are unbelievable.

These accounts are then listed as delinquent. Within no time the credit card issuer will update this delay in your credit reports. This delinquency comment will stick to your report for seven long years. This will result in significant cut down in your credit score because the payment record is reducing your score to 1/3 rd.

Many of us have a misunderstanding that to get rid of this comment they can simply close the delinquent credit card account. But we must know that this is not the solution of this problem and this comment will not go off from your report for seven years even after the closure. The mortgage companies and also the auto loan providing companies are alarmed about these comments. All your future applications will suffer due to this as you are charged high interests.

You have to sign the agreement with the card issuer at the time of issuance. Most of the card company agreements include a special clause. This clause states that this delinquency remark on your report is enough for other card issuers also to increase the rate of interest. Due to this you cannot escape from the losses that you incur as you pay higher interest rates for the coming years.

All this can be avoided if you take proper care and your records are timely updated and managed about all credit cards you hold, their credit limits, your dues and the most importantly, their due dates. Your due date should be convenient or else you can put a request and ask them to change it for you. If you have a difficulty in paying even the minimum amount for your dues do not hesitate to call the card issuer. Request them for some concession. Never try to hide these problems from them as they are always alert about such delays. For them this delay can mean you are on the verge of bankruptcy!