In today’s society, it’s so easy to get access to credit; and because of this, consumers are drowning in debt up to their necks. Being $20,000 in debt is typical in today’s society!
Due to the fact that consumer debt is at an all-time high, more and more people want to be informed of helpful and trusted tips to rebuild credit history. Most of the time, when people hear the word “budget,” they think of having to starve themselves and an almost non-existent social life. Lucky for you, having an effective plan for managing your debt and of course maintaining healthy personal credit and credit scores, by using certain types of credit cards, will definitely assist with meeting your financial goals.
Not only are these credit cards beneficial, they also provide for some consumers the only way out, especially if they’ve been denied a bank account or traditional credit card. Given that it takes two incomes in most households and a great majority of men and women both are in the workforce these days, there is hardly any time to prepare budgets and investigate ways to increase their credit scores.
In order to get on the path to financial success, you must make your first step! Why don’t we take the first step and weigh both the secured and pre-paid credit cards, and the advantages and disadvantages of each.
Secured Credit Cards
Advantages- Having a secured credit card is a very easy and cost effective way to build your credit. These secured credit cards can also rebuild and improve damaged credit reports. They work exactly like a traditional credit card.
Cons – One of the major drawbacks to this type of card is that to secure the card you must put down a $200 to $250 deposit with your application. For many this may be a tuff requirement. These cards also tend to have much higher interest rates (15% or higher) and additional charges such as an annual fee (usually around $50). Despite these drawbacks, for many looking to rebuild their credit, these cards make sense.
Pre-Paid Credit Cards
Positives- The Pre-Paid credit cards come in great handy, because they allow you to be more free and flexible with YOUR money! This type of card looks exactly like a traditional credit card, and is used the same way. However, instead of the credit card company giving you a limit based on your financial position, these accounts have you “load” the card with your very own money (like a debit card). No worries, most people get approved for this type of card, despite any past 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.
Please remember that Pre-Paid cards cannot be used in every situation. Hotel and car rental agencies, for example, may not let you use the pre-paid card to book a room or secure your rental. Just be sure to call in advance and ask about the company policy before you begin your booking.
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Consumer advocate Linda Seamore is dedicated to educating people on how to protect their identity. After research on identity theft, she found out about Life Lock , the industry leader in ID theft protection. Life Lock is hands-on identity theft protection that specializes in prevention rather than after-the-fact protection. Visit www.LifeLock.com & learn how to take control.
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