Tuesday, May 24, 2011
Why prepaid cards are better than Store cards
It is very hard not to be tempted by store cards when it’s being shoved in your face at every turn and offering seemingly great deals like 15% discount on all your purchases. Not all people can resist the temptation of a shopping spree but as the saying goes, ‘all that glitters is not gold.’
Yes store cards are easy to qualify for, even individuals with poor or minimal credit can make the cut and it’s great for consumers who need to establish or improve their credit history.
It also offers special store perks such as free shipping and delivery not to mention store reward programmes and members’ only specials.
This is all good until you receive your first statement and realise you have spent too much on unnecessary (or unaffordable) impulse buys.
Another horror of having a store card is that they rarely have reasonable interest rates (they are frequently over 20%). All your "perks" will dissolve quickly if you aren't planning to pay them off in full each month.
Compared to prepaid cards, there really is no contest; prepaid cards helps curb out of control spending whiles store cards escalate it. Prepaid cards are a great way to avoid debt and future unnecessary worry over finances.
Whiles prepaid cards teaches money management especially to young people, store cards entices them to spend beyond their means.
Majority of prepaid cards have a credit building feature, enabling users with bad or no credit to build a positive credit history whiles a store card is easy to qualify for and a small lateness or delay with payment will tank your credit rating.
Finally another obvious advantage a prepaid card has over a store card is that prepaid cards protect users against fraud at home and abroad whiles the theft of a store card only brings excess bills and debt.
So the next time a store clerk hurls the temptation of instant savings gratification via a department store credit card, take a timeout and think before accepting.