Most people have credit cards or at least know what they are. Credit cards are small, rectangle-shaped pieces of plastic that can be used instead of cash to buy things in stores and online. All of the different kinds of credit cards have their own credit terms and conditions that say when payments must be made on credit balances, how much interest must be paid on outstanding credit balances, and what will happen if payments aren't made on time, which is usually having to pay late fees.
Over the past few decades, credit cards have become the preferred way to pay for people all over the United States and even the world. This is because they are easy to use, convenient, and easy to get, and they can be used to buy things that would be out of reach otherwise. Most of the time, credit cards are helpful and good for the economy.
But when credit cards are used too often and to buy things that are very expensive, people can get themselves into a lot of financial trouble. People's biggest problem with credit cards is that they charge much more than they can afford and end up with a lot of debt. Some people can take years to get out of debt because of their credit card debt.
People with bad credit or who don't want the responsibility that comes with a credit card can use prepaid charge cards or debit cards as an alternative. A prepaid charge card is based on the idea that a person can't spend money they don't have, but they can still use the small, rectangular piece of plastic that is so much easier to use than cash.
A charge card that has already been paid for is linked to an account that has money in it. Every time the pre-paid charge card is used, money is taken out of that account electronically. The account holder can add money to their pre-paid charge account at any time or set it up so that money is automatically moved from another account on a set schedule. Charge card companies usually charge a small fee every time the card is used, or they may charge a small fee every month. There are sometimes no fees at all that go with the card.
People who have had credit cards in the past and have bad credit, young adults who have never had a credit card and need practise, parents who want to give their children a card but don't trust them with real credit, and people who never seem to have cash on hand are good candidates for pre-paid charge cards.
One of the best things about most pre-paid charge cards is that they look almost exactly like regular credit cards, if not exactly the same. So, if someone has a pre-paid charge card because they have bad credit, people who see the card probably won't know the difference.
Debit cards are very similar to pre-paid charge cards, except that they are usually linked to a person's regular checking or savings account at their local bank. Even though a debit card may have a Visa or MasterCard logo on it, money is automatically taken out of the person's checking or savings account when it is used.
Fees may or may not come with debit cards, and the terms and conditions of a debit card will depend on the bank that issued it. Banks often give good deals on debit cards to people who agree to have their regular paychecks deposited directly into a checking or savings account every two weeks or once a month.
Before deciding on a regular credit card, a pre-paid charge card, or a debit card, look at all of your options on the Internet and at local banks. There are a lot of choices, so everyone should be able to find something that works best for them.
