Reforming Your Finances: 3 Reasons Why Prepaid Credit Cards Are Your Golden Ticket out of a Bad Credit Score
There are many different reasons why you may have had a hiccup on your credit score. From missed payments to bad credit, damage to your credit score can prevent you from getting the best rates available when financing a new car, home, or loan. Luckily, using a prepaid credit card can help to restore your credit score and get you back on track. Today, we are going to look at three different reasons why prepaid credit cards are your golden ticket to get out of a bad credit score.
One of the biggest reasons that people have bad credit scores is the fact that they have acquired more debt than they can pay back. This results in missed payments, interest fees, and overbearing stress. With a pre-paid credit card, you can easily prevent overspending as it allows you to use the card more like a debit card. This means that you will need to load money on to the card to be able to spend it. This allows you to only spend the money you have instead of being able to spend more than you have and acquire high-interest charges. By doing this, you can make sure that you are not building more debt while you work to pay off any debts that you currently have.
No Need For A Bank
With a prepaid credit card, you will not have to worry about dealing with a bank. Having your money in a bank requires setting up checking and savings accounts which can result in unwanted fees to basically hold your money for you. Another disadvantage of using a bank is having to use their debit or credit cards which can result in their own interest charges or maintenance fees. With a prepaid card, you can direct deposit money straight to the card for easy use. You can do it all online with a bad credit loan and not have to worry about visiting or finding a reputable bank. These prepaid cards can be used just like any other card so you have no worries when renting a car, hotel room, or other expense where you would use a credit card.
Easier Money Management
With a credit card that has a spending limit on how much you can borrow, you will be more inclined to splurge and spend money that you don’t have. Credit cards are great for emergency use or to help earn points, but can easily get out of hand when you lose track of how much money you are actually spending. By having to pre-load money onto a prepaid credit card, you know exactly how much money you can spend and will be more rational with the purchases that you are making. Since these prepaid cards are similar to a debit card, without the hassle of using a bank, you will never spend money that you do not have. This allows you to easily manage your money and prevent yourself from digging yourself deeper into a worse credit score. You can focus on rebuilding your credit with a bad credit loan to repair your credit.
Great article. One of my favorite reasons for a prepaid card is the protections offered versus cash. Since most prepaid cards feature a payment network like Visa, Mastercard, or American Express, they come with the same protections of a basic credit card – but without the risk to a credit score. Something like the Bluebird by AMEX lets the holder make payments pretty much anywhere in the U.S., plus reload their card right at the register of Walmart!