Many people have decided that it just isn’t worth it—credit, that is. One of the neat things that this recession has done is to convince people that although credit is handy and easy, there’s nothing that beat cash and savings.
So, are these the only two options? Do I need to cut up all my cards or is there still a way to get the ease of credit while only spending my own money?
Enter a special kind of Visa Debit card– the prepaid debit card!
Yes, that’s right, you can now get debit cards where you put money on the card and can only spend what’s on there. The neat part about this card is that there are no insufficient funds charges—so once you hit the limit you’re done. But it also gives you the convenience of a normal bank account where you can pay your bills online and carry one card in your pocket instead of cash.
You can even direct deposit money in there.
One neat way to use this card would be to put your discretionary spending on the card (much like I do with cash) and then put the funds to pay your bills, etc., in your normal bank account. That way you can have the funds separate and you’ll know exactly how much is left over without having to carry envelopes around.
It’s a neat idea worth exploring!
That’s about right. I’ve been using a Visa debit card for a long time now, and a bank account to pay my bills. You can track it and decide the best way to do it using a service like Mint.
Posted by Ling | May 8, 2009, 10:26 amDebit cards are easier to not mess up on, but unfortunately don’t help your credit score. If you plan on buying a house/car/ anything through credit you are going to want to have something on your credit report saying that you can manage money.
The best thing to do is to only get Bank Cards, because those affect your balance the best and have the lower APRs. Make sure to NEVER reach your credit limit on the cards. If you pay consistently and pay over your minimum payment, there shouldn’t be a problem in your credit. In fact, your credit should improve significantly.
At the same time, you have to be wise with credit cards. Don’t view them as “free money” but as “borrowed money”.
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Posted by militarywifey | May 14, 2009, 1:22 amIt is better to use a credit card and just pay off the balance each month. Debit cards are more likely to result in fees, as users charge more than is in their bank account that minute (and then rack up fees each new charge until their is a deposit). Also the law protects credit card purchases in ways not provided to debit card purchases.
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Posted by John @ Curious Cat Investing and Economics Blog | May 17, 2009, 8:51 am