In the times we’re living in, many people can easily attain consumer credit. People living in the United States are constantly finding themselves under a mound of debt that only seems to continue to grow. Being as much as $15,000 in debt is now more common than one might think.
As the pressures of mounting consumer debt become an issue for more and more people, the demand for legitimate and proven ways to rebuild your credit history is on the rise. The word “budget” conjures up extreme images of depriving oneself of the foods one likes or more extreme visions of starving oneself pop up. However, a proven formula for debt management and the rebuilding personal credit and credit scores using a specific type of credit card dispels such visions.
In addition to being extremely helpful, these credit cards also provide consumers with bad credit, who’ve been denied traditional credit cards and bank account, a way out of their misery. It is common knowledge that here in the United States, there must be two people earning income in a household for a comfortable lifestyle to be maintained. Moreover, if two people are working outside the home, then who is left to do the budgeting and financial planning?
They say that the way to eat an elephant is one bit at a time. Let’s take our first bit and analyze both secured and pre-paid credit cards, and the cons and pros with each for your situation.
Secured Credit Cards Pros – Obtaining a secured credit card account is a quick, easy, and affordable way to build your credit. These cards will also help to better your damaged credit by slowly rebuilding it. They are used the same way you use any other card and are taken by vendors anywhere a regular debit or credit card can be used.
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 tough 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 Pros – A pre-paid credit card can be a great way to provide you with the freedom and flexibility of having your own credit card, without having to be in debt. While these cards look and feel like every other credit card, and can be spent in all the same places, these cards require you to put money on the. In effect, you are spending your own money just like cash. The approval process for this type of card is easy and is a definite guarantee.
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.
Remember also that pre-paid cards may not necessarily be accepted in all situation especially for hotel or car rentals. They also may not allow you to secure the reservation with on of these cards. To be on the safe side, always call ahead of time to verify that a particular vendor accepts the kind of card with which you wish to pay.
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