Prepaid Debit Cards versus Traditional Credit Cards

For most of us in this world it’s a case of “I wish I knew then what I know now” when it comes to our finances. This is particularly true in the sense that had one possessed the financial knowledge that they do later on in their lives, back when they were just starting out on their own, certain situations would have been better managed since there are some instances when it’s a matter of just one decision going on to shape a good chunk of the way your financial life is going to play out.

I suppose that’s a very long way around to get to the topic at hand, which is a discussion of whether it’s better to use prepaid debit cards over traditional credit cards. There’s more to it though, because this choice between the two options makes for a very powerful representation of the one choice we’re constantly faced with in our financial lives. This is the choice between living within our means or getting into debt as a result of a desire for instant gratification.

I probably don’t need to say it, but the prepaid debit card symbolizes the choice of living within your means and only spending money you already have, while the credit cards option symbolizes the Achilles heel of many of us – giving in to our desires to have things that money can buy before we’ve even earned the money to pay for those things.

Upon taking a closer look at how prepaid cards function in comparison to traditional credit cards, through which you can access credit, the only real difference is the fact that a credit card acts as a pre-approved instrument through which you can dig into some credit. Prepaid debit cards are still widely sold to hold the advantage of offering a means of payment for people who would otherwise not qualify for traditional credit cards, but that’s just how the financial sector itself wants us to see things.

The real advantage a prepaid debit card holds is that it offers a means of payment for products and services which would otherwise not be available to those prospective clients who don’t qualify for traditional credit cards. To put it simply, if for example you had a fixed line rental for a fiber broadband connection at home, if you don’t have a credit card then you essentially can’t top-up on your prepaid account of this sort.

The telecoms industry remains one of many which only accept credit cards as a means of payment, especially if you want to complete your payment online, so that’s where prepaid debit cards come in handy.

Beyond this advantage however, a prepaid debit card should perhaps always symbolize the better choice to make with the manner in which one handles their finances. Yes, there are practical advantages to the use of credit cards and their credit facilities over prepaid debit cards, but this is when you get into the territory of actively seeking to make financial choices that will improve your financial life.

Borrowing money to invest in something versus borrowing money to buy a pair of shoes – which one makes better financial sense?