Say No to Credit Card Fees with a Prepaid Debit Card

Posted by Jon Alexander

May 31, 2009

by Nick Dunjaski

Have you ever really examined your credit card bill? Do you understand all of the different fees you’re being charged? For a long time now, credit card companies have been operating without any real scrutiny and the number and types of fees they charge their customers have gotten out of control.

The financial climate is changing though. Consumers are waking up to the reality that they have little or no control over what credit card companies do and that they (the consumers) have to find alternatives that are more customer-friendly. One of those more customer-friendly alternatives is the prepaid debit card. A prepaid debit card can actually help you get free of your credit card fees.

If you make the commitment to using a prepaid debit card in place of a credit card, you can begin to replace one with the other. Over time, you can make all your usual credit card purchases with the prepaid card and stop using the credit card altogether. Then you can set up automatic payments on the credit card and lock it away somewhere.

This will probably save you a lot in fees over time - especially penalty fees which are the credit card company’s bread and butter. You see it’s in their best interest to charge you as many fees as they can and so they change the playing field in their favor whenever it benefits them and maneuver the rules so they’re difficult for consumers to understand or even follow. For instance, have you ever had an over-limit fee?

An over-limit fee is the penalty fee you’re charged whenever you run up your balance over your credit limit. Since you can do this pretty easily, your “limit” obviously isn’t really a hard and fast number. Rather, it’s more of a threshold that triggers extra fees from the company. Then, if you just pay the minimum payment (which the company so conveniently calculates for you) you’ll drop below the limit right? Well, not quite. You see, often the next finance charge will send your balance right back over the limit and guess what? You got it, you get charged another over-limit fee. It’s pretty sneaky if you ask me. If you used a prepaid debit card, that scenario would never happen.

Prepaid cards don’t come with tricky monthly finance/billing cycle calculations either. These are the computations the credit card companies make to determine how much they’re going to charge you to carry your balance from one month to the next. There are actually 6 or 7 different ways these charges can be calculated and everyone is designed to yield the highest return for the company based on your spending habits.

Another great (and hidden) fee the credit card companies receive is the interchange fee. These are pretty much secret fees that businesses pay the companies to cover the actual credit card transaction costs. Then of course the businesses pass the expense onto their customers by charging higher prices. There are some estimates that say consumers pay about $2.00 in interchange fees for every $100.00 they spend with a credit card. That $2.00 adds up to tens of billions every year for these companies.

Credit card companies hold all the power. They control the rates, they control the rules, and they set the fees. Just about the only thing you have control over is whether or not you do business with them. But if you have a high balance, you’re probably stuck. Well I want to challenge you to get “un-stuck.” Make the switch over to prepaid debit cards and use them to more properly manage your budget. You’ll be glad you did - and you’ll save money too.

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Learn how prepaid credit cards can help you control your budget and finances.

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