In the wake of the financial crisis that has gripped most of the world in the last several years, many consumers are seeking out alternative cash flow options in order to avoid sinking deeper into debt. Prepaid credit cards appear to be a viable alternative to the more standard model, but Michigan residents are warned that not all is what it seems. Credit card debt is still possible with a prepaid card - it just may not come in the form one would expect.
Consumer Reports has recently published a report that suggests prepaid credit cards are rife with hidden fees and a variety of restrictions that customers may not be aware of when signing up. Some cards feature unreasonably high monthly fees, an inability to use ATMs and other restrictions. Others charge fees for not using the card enough and other similarly absurd charges, which experts believe may be partly due to the fact that prepaid cards are not regulated the same way as traditional credit cards.
The report suggests that up to one third of Americans are susceptible to these underhanded terms and conditions that many agree to without realizing it. Worst of all, the lack of insurance means that if a card is stolen, there is no guarantee that money will ever be refunded by the company. While standard credit cards often charge very high interest rates, there is a degree of security inherent to dealing with an existing financial organization.
Credit card debt is among the most difficult to work down thanks to high interest rates and the tendency of some people to spend frivolously. But there are still options available to deal with this sort of debt that doesn't require turning to a shady prepaid card company. Michigan residents are urged to learn more about all of their options before committing to a prepaid card.
Source: reporterherald.com, "Consumers warned about prepaid cards," Heather Somerville, July 30, 2013