Avoid Credit Card Debt - Get a Prepaid Bank Card Instead

Getting a prepaid bank card can have several advantages over other types of cards. Many financial institutions offer prepaid bank cards as part of their programs. They are very simple to get approved for and they can make your life easier. While many people are aware of them, most people have never had any dealings with them. Here are a few things to consider about prepaid bank cards and how they work.

How They Work

The prepaid bank card system is very simple to understand. You get a card from an issuing bank with your name on it and a card number. It looks just like a credit card and can be used wherever credit cards are taken. You give the issuing bank an amount of money to put on the card. You are then allowed to spend that amount of money on the card and no more. When you spend the amount of money that is on the card, the card becomes useless until you put more money onto it. It is basically like carrying cash accept a little safer. There are safeguards in place that can help you if you lose the card or it is stolen. If you report the loss of the card quickly enough, they can inactivate the card and your money is still safe. If you lose cash, it is as good as gone. 

Avoid Credit Card Debt

Instead of using prepaid bank cards, many people just use regular credit cards instead. With a credit card, the only thing that will stop you from buying more is your credit limit. Most of the time, the credit limit is much higher than you could actually afford to pay off. A common credit card balance is $5000 for example. While the credit card company is extending this amount of credit to you, most people do not have an extra $5000 laying around to pay the bill at the end of the month. Therefore, the balance stays on the card and accumulates interest at more than 20% in most cases. This can lead some people into a hole that they cannot get out of in a reasonable manner. If you simply make the minimum payment on the card, you may be paying it off for 20 or 30 years depending on the size of the balance. 

Credit card debt has effectively crippled many people in the world today. They can barely afford the minimum payment on the card and they are just getting by. With this type of arrangement, they never seem to make any headway on their debt and it hangs over them for years.

With a prepaid bank card, you can avoid all of this. You will only be able to spend what you have on the card. You know that you can afford it because you already came up with the money. This helps us to regulate our spending and stay on top of our debt situation. 

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