Why You Should Switch From a Credit Card to a Prepaid Debit Card
If you’re paying any attention at all to the financial news nowadays, you know that credit card companies are starting to come under the microscope. For years they’ve had their way with their customers. They’ve been able to set and charge fees with virtually no oversight – and many of these fees have been difficult to understand if not outright hidden.
The financial climate is changing though. Consumers are waking up to the reality that they have little or no control over what credit card companies do and that they (the consumers) have to find alternatives that are more customer-friendly. One of those more customer-friendly alternatives is the prepaid debit card. A prepaid debit card can actually help you get free of your credit card fees.
If you make the commitment to using a prepaid debit card in place of a credit card, you can begin to replace one with the other. Over time, you can make all your usual credit card purchases with the prepaid card and stop using the credit card altogether. Then you can set up automatic payments on the credit card and lock it away somewhere.
If you do that, you’ll never have another late fee again. Credit card companies love to charge late fees. In 2008 over 19 billion dollars was raked in by these companies for their various “penalty fees.” That’s a lot of dough, especially when you consider that in some cases the companies manipulate their billing practices to put the consumer in a position to incur these fees. Here’s an example.
Every credit card customer has a credit limit but the companies don’t stop you from exceeding it because if they did, they wouldn’t be able to charge you an over-limit fee. But what’s really shady is that your next minimum payment will only pull you under your limit temporarily. As soon as you pay it and your finance charge is calculated, you very often go back over the limit. Then wham – another over-limit fee. it’s amazing that this practice is even legal. That would never happen with a prepaid debit card because you simply wouldn’t be allowed to spend more than what you’ve loaded to the card.
Prepaid debit cards can also save you from billing cycle calculations that favor the companies too, like the famous double-cycle billing. That’s the name used to describe the practice of calculating your monthly finance charge based on an average of your last two months’ balances (not just the current month). With a prepaid card, you never pay a finance charge at all.
Then there are the Interchange fees. These are the fees that consumers pay through higher prices because the retailer pays the credit card companies a little something for every purchase they process. Originally those fees were supposed to offset the credit card company costs for handling the transaction. But now they’ve become a real cash cow for the companies because they’re paid even if you can’t pay your bill. They’re hugely profitable for the companies.
Credit card companies hold all the power. They control the rates, they control the rules, and they set the fees. Just about the only thing you have control over is whether or not you do business with them. But if you have a high balance, you’re probably stuck. Well I want to challenge you to get “un-stuck.” Make the switch over to prepaid debit cards and use them to more properly manage your budget. You’ll be glad you did – and you’ll save money too.
