According to a 2014 Gallup survey, 71% of Americans have at least one credit card – there are 2.6 active credit cards in circulation for every American man, woman, and child, including those who don’t use them. Americans who do use credit cards have an average of 3.7 active cards each. And that figure doesn’t account for bank-issued debit cards and prepaid debit cards, which leverage the same payment networks (such as Visa and MasterCard) as many credit cards.
If you ever want to start an argument in a financial forum, all you have to do is bring up the topic of credit cards. It seems that everyone either loves them or hates them.
Some financial gurus, most notably Dave Ramsey, see credit cards as pure evil. Ramsey states that “responsible credit card use does not exist,” and maintains that there is simply no good reason for anyone to use one, ever. But others, such as Jeffrey Strain of the investing site The Street, argue just as passionately in their favor. Strain calls credit cards “an excellent financial tool” on account of their convenience and the protections they offer consumers.
My 30-day challenge left me with some clear lessons that can be broadly applied by anyone using a reloadable prepaid debit card to budget for day-to-day expenses – particularly if the card is part of the Visa Clear Prepaid program.
1. Clearly Communicated Fees Make Budgeting Easier
One of the first things I noticed when I signed up for my Green Dot® Reloadable Prepaid Visa® Card was the clear, straightforward fee schedule. All possible fees are laid out on a single webpage, making them easy to process at a glance.
To experience the versatility and ease of my Green Dot® Reloadable Prepaid Visa® Card firsthand, I planned and participated in a 30-day challenge, sponsored by Visa Clear Prepaid and Green Dot, that required me to pay for my day-to-day expenses with my prepaid debit card. The Green Dot® Reloadable Prepaid Visa® Card is one of the prepaid cards in the Visa Clear Prepaid program, which helps alleviate stress in choosing and using a prepaid card. Cards meeting the Visa Clear Prepaid standards provide you with transparency and consumer protections. Here’s how it went:
Planning the Challenge
When it comes to economic issues, the media has a love affair with hyperbole. For instance, in 2010, CBS News ran a chilling report on American consumer debt. Entitled “Addicted to Debt,” the story gave detail about the state of American consumer debt. Among the data points, the piece reported that Americans owe $775 billion in total on their credit cards. Blaming impulsive shopping, experts pointed to an “unbelievable trend” that was making credit card debt the next crisis for the United States economy.
Credit card companies like to bombard consumers with special offers, and if you have a good credit score, you likely receive pre-approved credit card invitations from time to time. Furthermore, if you already have a credit card in your name, your issuer may periodically send you convenience checks tied to your credit card account. You can use these checks for any purpose, providing that a retailer or other business accepts this method of payment.
Convenience checks look like regular checks, and if you’re cash-strapped, they’re pretty enticing to use. However, before you hastily fill one out, it is crucial that you learn how convenience checks work – and understand the numerous risks.
Everyone knows that credit card debt is “bad” debt due to the high interest rates on most consumer credit cards, while mortgage debt is often described as “good” debt. But sometimes the distinction between “good” and “bad” debt isn’t so clear-cut. In fact, because of this generalization, some people make the decision to refinance their home mortgage in order to free up money to pay off credit cards. If you are considering doing this, realize that it’s rarely if ever a good idea to pay off credit card debt with the equity in your home.
If you’re like many people, you believe that as long as your credit card bill and other recurring debts are paid on time each month, you must have a great credit score. Right?
Unfortunately, earning and maintaining a good credit score isn’t nearly as simple as you might think. While timeliness and credit utilization play a major part in determining your score, there are a number of other factors that come into play – and some aren’t so obvious. Take a look at some of the issues below and see if you can improve your score.
Applying for a credit card is one of the fastest and easiest ways to build your credit score – and if you’re low on cash, a credit card can help you through a financial jam. However, your enthusiasm over getting approved for a new card could come to a screeching halt if you receive a rejection letter.
A credit card denial can come as a complete surprise, especially if you feel that you’re a good candidate for a new account. But when reviewing applications, credit card companies take many factors into consideration, only approving applicants with a low default risk.
In 2000, I left America to study abroad, and thought I was being responsible by closing a few credit card accounts that I wasn’t planning on using.
Not only did closing credit accounts lower my credit score – and cost me thousands of dollars when I got a mortgage years later – but it also made it harder for me to get credit when I came back home. The experience was a costly lesson: Paying off credit cards is generally good, but closing accounts often isn’t. That’s why it’s important to know which strategies for paying off your debt can improve your credit score. By paying off card debt and managing how and when you get credit cards in the first place, you can lower your debt and boost your credit score at the same time.
Until President Richard Nixon took the United States off the gold standard in the 1970s, American cash was redeemable for gold or silver. Currently, the U.S. is on a system using fiat currency via the Federal Reserve, as the value of money is based on faith in government and law. While the Federal Reserve maintains control of the physical cash system, some powerful industry forces are trying to change that.