Insurance and Credit

Have you ever really examined your credit card bill? Do you understand all of the different fees you’re being charged? For a long time now, credit card companies have been operating without any real scrutiny and the number and types of fees they charge their customers have gotten out of control.

The tide is beginning to turn now though. More and more people are realizing what’s been happening to them and more and more people are starting to do something about it. One technique that can help us avoid the burden of monstrous fees is to switch off our credit cards and switch on prepaid debit cards. Let me explain.

If you’re in a position to do so, I propose you start converting all of your existing credit card spending over to prepaid debit cards. Month-by-month, phase out all of the credit card purchases until you make no more. Then (again, if you can), set up an automatic payment to your credit card, something that is higher than the minimum payment required and something that is scheduled to arrive at least a few days in advance of the billing due date. Then lock the credit card away in a drawer!

If you do that, you’ll never have another late fee again. Credit card companies love to charge late fees. In 2008 over 19 billion dollars was raked in by these companies for their various “penalty fees.” That’s a lot of dough, especially when you consider that in some cases the companies manipulate their billing practices to put the consumer in a position to incur these fees. Here’s an example.

Let’s say your credit “limit” is $1,000.00. You would think that you couldn’t charge more than that and if you tried your card would be declined. You’d be wrong. In reality, that’s a soft limit. Credit card companies are perfectly willing to let you charge beyond it so they can tack on a $25.00 or $35.00 over-limit fee to your bill. Then they can get tricky and send you a bill with a minimum payment that will bring you just under the limit – but not when you calculate in the monthly finance charge. In other words, you make the minimum payment, think you’ve dropped below the credit limit, the company tacks on its finance charge, and bang – you’re back over the limit and you’re getting a second over-limit fee. Pretty slick huh?

Prepaid cards don’t come with tricky monthly finance/billing cycle calculations either. These are the computations the credit card companies make to determine how much they’re going to charge you to carry your balance from one month to the next. There are actually 6 or 7 different ways these charges can be calculated and everyone is designed to yield the highest return for the company based on your spending habits.

Another great (and hidden) fee the credit card companies receive is the interchange fee. These are pretty much secret fees that businesses pay the companies to cover the actual credit card transaction costs. Then of course the businesses pass the expense onto their customers by charging higher prices. There are some estimates that say consumers pay about $2.00 in interchange fees for every $100.00 they spend with a credit card. That $2.00 adds up to tens of billions every year for these companies.

These are just a few of the reasons why switching over to a prepaid debit card can benefit you as a consumer. Let’s face it; the credit card companies have almost all the leverage. About the only options we have left is to cut our losses and prevent them from preying on us in the future. So if you’re in a position to do so, I invite you to take a good long look at prepaid debit cards and see how they can become your sensible, more consumer-friendly alternative to credit cards.

Prepaid credit cards are some of the most popular card offers. Prepaid cards have become more popular with consumers, and the prepaid card market has produced a variety of new products and services. The Prepaid Credit Card can be used online, over the phone, at grocery stores, petrol stations, chemists, ATM machines and at 24 million merchants worldwide. Another difference here is that you usually can not use a gift card online, but if you shop on eBay or other online sites regularly, you can always use a prepaid Visa card or whatever prepaid credit card is accepted by that site. You can then go out shopping with your prepaid credit card in your purse or wallet just as you would with any other type of credit or debit card.

So, why should you apply for a prepaid credit card?

As we know, credit card debt is a raging problem which is caused by improper usage of credit cards. Such people end up spoiling their credit rating to an extent where they cannot get another unsecured credit card (that is what we call the commonly used credit cards). Even after they have paid off their dues and cleared their debt, their credit rating still haunts them. For such people, secured credit cards are a boon. Secured credit cards present them with an opportunity to not only get a credit card in the first place but also to improve their credit rating by using the secured credit card in a disciplined way (paying their dues in time, controlled spending, utilizing a maximum of 70% credit limit etc etc). As they continue with these good habits, their credit rating gradually improves over a period of time. Hence secured credit cards provide them with the means of rectifying their mistakes (credit rating).

It’s an easy way of saving money if you can get a credit card in the first place, but not if you’re one of the millions of customers who have experienced credit problems and get regularly turned down for a credit card or loan. The prepaid credit cards cut this problem out by allowing you to preload cash onto the card and then to use it abroad for a small fee. Prepaid credit cards are not only an excellent option for those with bad or no credit, but also for those who shop online.

So many people are deciding to choose prepaid credit cards. Even people with a bad rating or no credit rating can use them since the funds need to be applied to the card upfront before it can be issued and used.

Some people just go for secured credit cards because they have heard a lot of horrifying stories on credit card debt ” maybe someone from their family or one of their friends was devastated by credit card debt and they dont want to repeat the mistake. So they decide to go for a secured credit card.

When credit problems have stopped you in the past for getting cards you will find the prepaid credit cards are easier to get.