Credit Cards vs. Pre-Paid Cards

Americans are debt-ridden. They love to find ways to get things and pay for them later. Credit cards are the most commonly used form of credit, because if you have one, you can make a rash decision on a purchase, hand the clerk a card, and walk out with the item you decided you couldn’t live without. A month later, the “thing” is collecting dust in a corner, and now your credit card bill arrives. Rather than paying it off, you decide that you are just going to make the minimum payment, because you want to be sure to have enough spending money for the rest of the month.

There is a better way to manage your money. Forget credit cards. They get everyone in trouble. There is more credit card debt and more bankruptcies over credit card debt than ever before. Get a pre-paid Visa or MasterCard from a large chain store like Walgreen’s, Wal-Mart, Kroger, or Rite Aid.

Pre-paid cards are very versatile. Maybe you want to save up for a special purchase like a new dress or a new comforter set for your bedroom. You will want to save that money and load it onto your card. Once you have saved enough, you can then use the card to make your purchase. You are pre-paying for what you are purchasing, which means you will never go into credit card debt.

There are many benefits that make a prepaid card a better option than a credit card or even a debit card. You will need to review what works best for you, but be sure to do the homework before making a final decision.

  • No penalties, late fees, or interest rates. The only fee you will have is the purchase fee and the loading fee. You will want to check out what the loading fees are before deciding on the right pre-paid company to go with.
  • Most cards are used just like a regular credit or debit card; most retailers and online companies will accept them.
  • No credit checks are required to get one. This is great if you have some issues with your credit and cannot get a credit card or a checking account with a debit card.
  • They are much safer to carry than cash, especially when travelling. If you have your card stolen or you lose it, you just call the company to deactivate that card and get another one.
  • Some cards offer the same benefits as with a checking account and give you online bill pay options, which allow you to pay your bills and manage your money online. You can set up recurring payments as well, so if you have a bill you know you have to pay every month at a specific time, you may be able to save some money by having it auto drafted from your card.
  • Be sure to check for these options when you are comparing pre-paid card services, so you can find one that best meets your needs.
  • You also want to be sure to check the fees the card companies charge so you can be sure to pick one that gives you the best option for your situation. Some simply charge you every time you load money. Some will charge you a one-time fee every month. Some may not even charge you if you have money direct-deposited every month for a minimum amount. Depending on what you are using the card for, you will want to select a fee schedule that makes sense for how you use the card.

Pre-paid cards are a great alternative to a traditional credit card. You will not have to be concerned with accumulating crushing debt. You will not be saddled with high credit card payments and high interest rates that make it difficult to manage your leftover money. Instead, you are paying for things as you go.