As the credit crisis continues there are more and more people looking for ways to reduce their debt or avoid going deeper in debt. As a result, the use of prepaid cards is soaring by an expected 3 billion more dollars than last year. The reason for this increase in popularity- consumers are looking for the convenience of traditional credit cards without the risk of increased debt.
Prepaid credit cards are not new in the industry however in previous years they were most attractive to people who either chose to not use unsecured credit cards or people trying to build credit. Since prepaid cards use the consumers own funds to establish available credit, credit history is not as big of a factor when applying for a prepaid card. For consumers who have good credit, the option of having a credit card that puts a cap on their spending (without incurring more debt) is very appealing in the current economic climate.
As prepaid credit cards continue to rise in popularity, consumers should know that using this type of card is not without a downside. While you provide the funds upfront, there are fees associated with the account. Consumers can expect to see application fees, processing fees and various other fees that can quickly reduce the amount of money you have remaining on your card to use for purchases.
If after reading the fine print on your prepaid credit card application you decide you are not willing to pay money to use your own money, you may consider looking into other ways to prevent incurring more debt. Adjust your spending habits, cut costs and seek out other money saving strategies if using a prepaid credit card is not for you. Other consumers who do their research and find a prepaid credit card that has reasonable fees may be willing to pay a few dollars to have the convenience of using a credit card for purchases that otherwise would require a payment at the end of the month.