People need to know how to avoid credit card debt. It may seem impossible but credit card debt can be avoided. The problem is we are in a fast paced society where immediate gratification seems to be all that people know. The more impatient we get, the more we can get caught up in making quick purchases now and thinking about them later. This can get the average person into trouble - but this does not have to be you.
Many people use their credit cards and do not think about the consequences until the bill comes. Then, there is the panic of "what do I do now?" You may find a way to pay the minimum payment due, but repeating this practice will keep you in debt forever. There has to be a better way, right? Well, there is - you may want to consider using a different kind of credit card. Let's take a peek and two kinds of cards that can help you avoid credit card debt.
Option #1: A pre-paid credit card. With this card, you only spend what you have invested into your pre-paid account. You have control over your spending limit because the limit is equal to whatever you have deposited. Let's say you deposit $500 and you go out and spend $250. You now know that you have used 50% of your credit limit. This is a great tool for parents teaching kids about budgeting, they work
wonderfully for college students, they make great gifts, and if you use them yourself, they keep you in control of your spending. They can be used to make purchases in stores and also to make purchases online. With prepaid cards, you FICO score does not matter. You can get this card even if you have bad credit.
Option #2: A secured card. This is similar to a pre-paid card because you make a deposit into an account. It is different from a pre-paid card because the amount you deposit goes into an inerest-bearing savings account which serves as your credit limit. You also have the opportunity to add to your deposit and increase your limit. Like a prepaid card, this option does not consider your FICO score and you can get one even if you have bad credit. But, the biggest difference from a prepaid card is that once you make purchases, you are responsible for making payments as well (just like a regular credit card).
An advantage to having a secured card is that you can do things with a secured card that you cannot do with a prepaid card like rent cars and make hotel reservations. Just remember that you have to make payments when you make purchases. Making consistent payments on secured cards can help you to increase your credit score. How? There are two reasons: these cards show that you have opened a new account, and they also show that you are able to keep up with payments. Many times when you have established a good payment history, you may be rewarded with a higher credit limit without having to make an additional deposit into your account. If you have kept up with your payments, have a $0 balance, and decide to close this account, you will get your deposit back plus any interest you have earned.
Avoiding credit card debt with these solutions is simple. You get out of it, what you put in. You only spend what you have deposited so there is no way to spend beyond your means. Spending beyond your means is how credit card debt rears its ugly head in the first place. You don't have to fall victim to this vicious cycle.
L. Waters Research Writer, LowRateSearch © 2009
You can easily avoid credit card debt. Just get the type of card
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taking advantage of secured and prepaid cards. Click here to choose the
best pre-paid card and secured card
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to your house. Do everything you can do with a regular credit card,
except without the debt!
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