Secured Credit Cards Could Reduce Credit Score Damage
In a world where Internet access is available around virtually every corner, it’s hard to resist the temptation to do everything from shopping to bill-paying on a computer. Many consumers now rely on online bill-payment systems that automatically use linked bank accounts or credit cards to make the transaction. However, by using automatic payment systems, consumers put themselves at risk of overdrawing their accounts. This can result in penalty fees, debt, and even credit score damage.
The Chicago Tribune reports that while running errands via the Internet may be convenient, there are ways consumers can play it safe. Secured (also known as “prepaid”) cards have the same characteristics of debit or credit cards, but they allow holders to use them within a set limit. This eliminates the risk of accumulating debt and triggering penalty fees.
The Tribune notes that some companies may charge an activation or application fee, but they’re typically one-time payments.
Prepaid cards are ideal for inexperienced credit card holders and those who want to want to impose greater discipline on their financial management habits.
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Date: August 23, 2010
Categories: Credit Score