Even if you have the
best intentions in the world, a large amount of available credit is not exactly
conducive to good financial management.
Especially if you have reasonably good credit, you may find that your
credit limit on your credit card is periodically increased, to encourage you to
spend more on the card. This is
fine if you have the budget and the discipline to pay the balance off in full
each month, but the problems start when you overspend and have to pay the high
monthly interest charges for your credit card debt. So how do you keep your spending in check
without losing the flexibility and security of your trusty piece of plastic? The answer is in a prepaid credit card.
A prepaid credit card has many of the features that you would expect from a credit card. You can use it in shops, restaurants and online to make purchases, and can usually use online banking to transfer money from your current account. However, the difference is that it is only your money that you are using. You load a certain amount onto the card, and are only able to spend that amount since there are no additional credit facilities.
In this respect, the prepaid credit card trumps both credit cards and debit cards, since the latter also still enable you to spend more than you have in your account if you have an overdraft facility. By controlling exactly how much you are able to spend on the card, it makes it far easier to budget, especially if you load money onto the card at the start of the month once you have been paid.
There are various ways
in which a prepaid credit card can be used. Either you could load enough onto the card to cover your
entire monthly living budget, or you could pay your bills from your current
account and use your prepaid card to limit your additional spending. Because there is no danger of spending
more than you have, the prepaid credit card is also great for teenagers
learning to budget for the first time, or students on a strict allowance whilst
living at university.
One caveat is that a prepaid credit card does have fees attached, so it's worth shopping around to see what each provider is offering. Some providers will charge a monthly fee, and there is usually an initial fee charged when you apply for the card. As with a credit card, you are charged for withdrawing money at an ATM machine ? typically between Â£1.50 and Â£3.00, so it's best to avoid using a prepaid credit card to draw out cash. Plan how you intend to use the card and choose your provider accordingly; if you're likely to use the card at ATM machines, pick the one with the lowest withdrawal fee, for example, and make sure that your provider offers online banking if you find it hard to get to a branch.
If you have trouble keeping a check on your spending, click here to apply for a prepaid credit card today. Say goodbye to credit card fees and exceeding your overdraft limit!