Advantages of Using a Prepaid Credit Card

There are many benefits to using a prepaid credit card.
A prepaid credit, also known as a secured credit card
is defined by bank rate as a credit card that, “…requires
a cash collateral deposit that becomes the credit line for
that account.

Having bad credit can cause your interest rates to go up. We all know that. A car loan, home loan or even credit card rates are all higher when you have bad credit. If your credit is bad enough, then you do not even have access to these types of credit.

There are other hidden costs that can dramatically affect your lifestyle and your finances. If you are not prepared for these extra costs, then you may really find yourself in a bind.

Job Search

Certain employers have traditionally checked credit in order to prevent hiring employees that pose a risk of theft or other fraud. These include banks, credit unions and even the military.

However, there are many other jobs that are now requiring credit checks for applicants. They mandate reasonable credit scores as a condition for employment.

Some jobs have no contact with customer data or money, and yet the employer still requires good credit. This can pose a serious hardship to someone with bad credit.

Apartment

Most apartment communities and other real estate landlords require good credit in order to rent. While collection accounts and other bad debts can hinder your application, a bad credit score or evidence of an eviction can nearly shut you out of most rental opportunities.

Insurance Rates

Insurance companies require a credit check during the application process. There are many reasons why this is required.

* 1. Credit is a Predictor of Responsibility: Insurers want to know that you are taking care of your property and driving responsibly.
* 2. Credit is a Predictor of Risk: Insurers know that debtors facing foreclosure or repossession are more likely to commit acts of insurance fraud.
* 3. Credit is a Predictor of Payment Regularity: Insurers want to know that you will pay your bill on time.

There are many arguments for and against this practice. The insured often argue that credit has nothing to do with the practice of insurance. Insurance companies argue that there are very relevant ties. Additionally, the claims data does back up their stance.

If you have bad credit or are at risk of ruining your credit rating, understand that it will affect you even if you do not plan to make purchases on credit. Your bad credit can hurt you in other ways.

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To finance my fiancée's engagement ring, I got a credit card that has a 0% rate for six months. I plan to pay off the balance before the six-month intro period expires and then cancel the card. Is that a good plan? Will canceling the card negatively affect my credit score?