Make Credit Card

budget with a prepaid card

2009-02-23T22:00:00.000-08:00

9 ways to budget with a prepaid card

If you're looking for a new tool to make budgeting easier -- and these days, who isn't? -- and you want to wean yourself off the credit cards, prepaid cards may just fit the bill to help you manage your finances.

Network branded prepaid cards provide users with the flexibility, convenience, and protection of a MasterCard or Visa credit card, combined with the financial reality of spending only money that is actually available at the time, as the user would spend cash.

Prepaid cards have become increasingly popular budgeting tools for both credit cardholders and non-credit cardholders, says Jennifer Tramontana, director of communications for the Montvale, N.J.-based Network Branded Prepaid Card Association (NBPCA), the three-year-old national trade association that represents the network branded prepaid card industry.

"Today, with access to credit potentially being an issue for some people, certainly we'll probably see these cards become more popular, just among the mainstream population, in terms of access to a branded card that doesn't necessarily require a credit check, because you put your own funds on it," says Tramontana.

Studies support Tramontana's prediction. A November 2008 research report on the prepaid industry from Mercator Advisory Group -- an independent research and advisory services firm that focuses on the payments business -- predicts that the total for load volume (money added onto prepaid cards) across all prepaid market segments will reach $362.3 billion by 2011. The report says network branded solutions will represent more than half of that total, with a predicted $124.6 billion in load volume.

NBPCA's recent study, entitled "Survey of American Consumers: Reloadable General Purpose/Payroll Prepaid Cards," which surveyed 600 U.S. consumers with annual incomes under $50,000, indicated an overwhelmingly positive response from those consumers who were also current network branded prepaid card users: 90 percent of network branded prepaid card users said they were satisfied with their prepaid card experience, while approximately 70 percent of prepaid card users said they were "extremely satisfied" or "very satisfied," says Tramontana.

Are prepaid cards right for you?

Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, and 23-year veteran of the credit counseling industry, says she thinks prepaid cards could be useful budgeting tools for some people.

"I think that consumers really have to know that they have a choice, and if they decide that this is the correct budgeting tool for them; that it meets all of their objectives, such as being able to not carry large amounts of cash with them, to be able to use credit, etc., while controlling their spending, then they've got to know, in the fine print, are there going to be hidden fees that are absolutely going to come back and bite them?" says Cunningham, who says that consumers with limited incomes may find the prepaid card's fees too costly to be truly valuable.

Jennifer Tramontana, director of communications for Network Branded Prepaid Card Association, adds, "Make sure you read all the terms and conditions, just like you should with any credit card or debit card you get. Read them -- make sure you completely understand them. If you have any questions, make sure you ask upfront."

How prepaid cards work
Consumers can apply for and load funds onto reloadable prepaid cards online, at financial institutions or at retail outlets. Once the cards are loaded, accessing the funds is as easy as swiping the card at an ATM or using it anywhere that network's cards are accepted.

Prepaid cards give you the flexibility to shop online, rent a car and conduct any other transaction that requires plastic -- provided you have the cash to back up any deposit on the prepaid card. "It does become difficult to travel, rent a car, book a hotel room, make any guarantee on a purchase, make a purchase online, without some form of credit card," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling and 23-year veteran of the credit counseling industry.

Fees may be assessed when you activate or reload your card and when you make a transaction. Weekly or monthly charges are also possible and can range from $1 to $10 or more, depending on the card, though some cards offer free unlimited transactions, reloading and more with paycheck direct deposits. (Compare features and fees of prepaid cards.)

Just as banks offer a variety of checking account services and options, so do the issuers of prepaid cards. That means consumers must shop around for the card that best fits their needs, says Tramontana. "This is a financial services product, and as we're all used to, various financial institutions offer different packages for their products and services. Prepaid cards are the same way -- each offer different features, different benefits, and a different fee structure. We encourage people to shop around before they pick a prepaid card to find one that suits their lifestyle. Some people would rather pay a higher upfront fee, and then have no transaction fees. Some people know they're only going to do one transaction a month, and they'd rather pay a transaction fee. Some cards come with personalization and other benefits; it just all depends on the consumer," says Tramontana.

Here are 10 top ways to budget with prepaid cards:

Save on interest charges and over-the-limit and late fees by switching from a credit card to a prepaid MasterCard or Visa prepaid card. Elise Young, 31, from O'Fallon, Ill., is a medical transcriptionist and a prepaid Visa card user. She began budgeting with prepaid cards almost a year ago. "I like the idea of a prepaid card more than a credit card because I'm not getting myself deep into debt, and I'm not paying thousands of dollars a year in interest charges," says Young. "I also don't have to worry about the impact that carrying a lot of credit card debt might have on my credit score."
Use prepaid cards instead of checks, and avoid those $45-a-pop overdraft charges. Enter your prepaid card number online in the same way you would use your credit or debit card to pay a bill. "It's better than sending a check because I don't have to worry about us accidentally overspending our checking account before the checks for bills can clear. I even like it more than paying by recurring automatic debit from my checking account because I know the money is on the prepaid card when I sit down to pay a bill," says Young.
Budget toward your bon voyage. "This year, my husband and I have been putting $50 onto a specific prepaid Visa every time each of us gets paid. That card will only be used for our trip, and best of all, we won't come home to an exorbitant credit card bill that we'll pay for months," says Young.
Use prepaid cards in lieu of cash. Sure, the "envelope" system of budgeting -- in which a set amount of cash is divided between envelopes for budgetary needs -- is popular, but it's also risky. "It's not extremely safe to carry around $500, $800, in your pocket, so I think from a safety perspective, you're better off having a branded payment card," says Tramontana.
Track your spending with your prepaid card and receive daily balance alerts via e-mail or over your cell phone. "Previously, when we used cash, we would spend through it really fast and not have any idea where it all went. Now that we can see it on the computer screen, it's easy to see where our money is going and where we can cut back," says Young.
Create a living expenses budget, loading $30 to $50 a week onto a prepaid card for workweek lunches, mid-morning lattes, and snacks. Once that money is gone, it's time to brown bag it and drink the bitter dregs in the lunchroom.
Limit your spending by adding only the money you have budgeted for specific purchases -- say, $600 a month for groceries, and $400 a month for restaurants -- onto the designated prepaid card. "If we put $200 on our prepaid card for groceries, we know we have to make it last until our next payday. If we have $50 budgeted for restaurants and we spend it all, we know that we're not going to be eating out again until we get paid," says Young.
Load your kids' allowances or college spending money on prepaid cards to teach them smart money habits and allow them to graduate college without crippling credit card debt. "This is a great tool to teach them how to budget and spend for the Facebook generation. This is how transactions are done today, and it's a great, safe way to teach younger people in your family about budgeting and spending effectively," says Tramontana. Plus, both you and your child get to see how and where the money is being spent.
Keep nosy credit card companies in the dark about "questionable" charges by using your prepaid card (in lieu of a credit card) at secondhand clothing stores, tire retread shops, casinos or anywhere else your credit card issuer might frown upon. Credit card issuers increasingly are using purchasing data to determine whether you are a good credit risk or not. This purchasing data can then be used to increase your credit card's interest rate, reduce your credit limit or both. For example, if you used to use credit cards to shop only at high-end stores but have had to cut back and now use your credit card at Goodwill and Wal-Mart, your credit card issuer is watching. To protect your credit, you may want to switch to cash or prepaid cards instead.

Credit Card Numbers

2009-02-23T19:03:00.000-08:00

Credit Card Numbers for Sale

Security experts at the InfoSecurity Europe conference are drawing attention to "data supermarkets" that sell stolen credit card numbers for a fixed price. According to a BBC story, "credit card details are cheap" on the black market while "the logfiles of big companies can go for up to $300." How much is my credit card number worth on the Internet?

As little as a few cents. Reliable statistics about data theft are notoriously hard to come by, and reports of cheap cards for sale are nothing new. Researchers who track the Internet Relay Chat servers where this sort of business is often done, however, are reporting that the lowest advertised prices of credit card numbers has been falling during the past two years. Symantec—a firm that sells security software to both consumers and businesses—reported earlier this month

that credit card numbers were now selling for anywhere between 40 cents and $20. (Credit cards from Europe or smaller card companies typically cost up to twice as much as standard-issue American numbers, presumably due to their relative scarcity within the market.) By comparison, Symantec researchers found bank account numbers going for anywhere from $10 to $1,000, and "full identities"—which include date of birth, address, and social security and telephone numbers—selling for between $1 and $15 a pop.

The demand for very basic credit card information appears to be shrinking—in large part because those data are often not very valuable. Credit card companies foot most of the bill when your card number is pilfered: By law, a consumer is liable for only $50 when a stolen card is used, and most companies waive even that. As a result, the companies have stepped up their efforts to cut down on fraud, reducing the potential benefit from accessing a stolen card number. As opposed to bank accounts, for instance, it is far more difficult to use credit cards to quickly (and anonymously) take out cash before an account is shut off.

In addition, the market for stolen data has become segmented. The available statistics on the price of pilfered data is based on information found on public channels. More sophisticated data likely sells at higher prices in more restricted venues. Simple credit card numbers are often sold in bulk—Symantec found sales of 500 for $200—while more specialized products go for a good deal more. The big money now appears to be in a host of value-added services, as more sophisticated criminals have gotten in the business of validating data, compiling more complete dossiers of information or selling "bots" that allow the buyer to collect data himself. The more expensive credit card numbers have often been field-tested already, with a seller placing a small charge on the account to see whether it goes through and if the owner detects any fraud. And a file that includes passwords, the answer to a user's security questions, and his mother's maiden name—along with the credit card data—might go for a few hundred dollars.

Transfer Credit Card

2009-02-23T18:50:00.000-08:00

Balance Transfer Credit Card

It's important to be well educated about balance transfer credit cards before applying for credit or making any other major financial decision. In our education center we will inform you about any aspect of applying for and using balance transfer credit cards. We publish new credit card articles weekly so be sure to check back often.

Easy Guide To Transferring a Credit Card Balance To a Better Credit Card
Transferring a high interest credit card balance to one with a better interest rate and/or better overall terms and features is usually a good way to reduce the amount of money you pay back on your existing debt. Depending on the “better” credit card you select, you may also be able to benefit from a rewards program or gain other features you didn't already have – including travel accident insurance coverage or an extended warranty program for new purchases made with the card. There are a few instances when a balance transfer is not the great deal it appears at first glance though, so it's important to do your research before moving your accounts around.
How Balance Transfers Affect Your Credit Score
Transferring balances with high interest rates to a credit card with a lower interest rate (or a 0% interest balance transfer offer) is a great way to pay your debt off faster and save money in the process. It's not as cut and dry as transferring the money from one place to another though, there are some other considerations to work out before you rush into the next balance transfer offer you qualify for: primarily, how does a balance transfer affect your credit score?
Are 0% Balance Transfer Offers Really Free?
Paying off credit card debt with 0% interest is a dream come true – which is exactly why a large number of credit card companies offer the promotions. They know it will attract new customers who have debt with other credit card companies to transfer that debt to their cards. But where is the value to the company offer the credit card balance transfer offer; if they let you repay that debt with 0% interest?
Balance Transfer Checks- Opportunities to Save
Credit card companies spend quite a bit of money on marketing to attract new customers-and it's always cheaper to keep customers they have rather than trying to find new customers.
Avoid These Common Credit Card Balance Transfer Mistakes
That offer to transfer your credit card balances sounds like a pretty good deal, doesn’t it? And it is, until you take out your magnifying glass and start reading all the fine print that goes along with the offer. What a lot of people don’t realize is that the lender making such an unbelievable offer wouldn’t be doing so if there wasn’t some way to benefit financially. These lenders actually feel safe in assuming that most people transferring balances won’t pay attention to the potentially costly details that accompany the offer.
Transferring a Credit Card Balance
Are you staring at that attractive advertisement for switching credit card companies by transferring your balance from one card to another? While many of these offers are truly great deals, balance transfers and card-switching is not something to jump into, eager as you may be. You need to do your homework first: Do enough research and investigating in order to determine whether it in fact is worth it or a good idea to make the transfer.
What You Should Know About Switching Credit Cards
With U.S. credit card debt at an all time high, many savvy consumers and investors are renewing their commitments to rid themselves of this burdensome and in most cases, unnecessary debt. In doing so they are constantly searching for the next best credit card with higher credit limits, lower annual percentage rates (APRs), and zero balance transfer offers.
Consolidating credit cards
Credit card consolidation is a popular solution for those with significant credit card debt, usually distributed on three or four different cards. Basically, this means putting all your debts together on a single card, like transferring it all to one loan. Of course, the goal is to pick a card that offers better conditions than what you already have, in order not only to simplify, but also to reduce your payments.