Credit cards are used widely across the globe, and most adults in the UK have credit cards debts. According to latest reports on personal debt, every family now has around £40,000. Of course, this does not mean that every household carries that level in debt, yet indeed the amount is steep. Credit cards are a large part of a normal person’s debt although they are becoming harder to apply for.
Since the recession and the fresh stance by the government to clean up the country’s financial books, banks and lenders are forced to adhere to much tougher rules regarding credit products. The the Labour party is often blamed for the severe situation in the country, with economic problems similar to Greece and Portugal.
The question remains, is it sensible for a person to take a new credit card when they are aware that there is an existing debt problem to settle? The fact is, credit cards are massively vitalfor many aspects of everyday life: big purchases such as a home can only be made with the aid of a credit card. Many internet merchants only accept credit cards, and the same goes for hotels. A large number of establishments do not even take debit cards – therefore, what choice do consumer have?
Thankfully there are loads of types of credit cards, from prepaid money cards to exclusive credit cards and corporate cards. The choice is huge, so most consumers are catered for. For example, a person who has difficulty receiving a loan or other personal credit product at a high street bank may now apply for a credit card for people with bad credit. This type of card usually has a small credit limit, but awards the card holder more purchase power and often there are additional features such as a credit rebuilding facility. This is designed to help the card holder rejuvenate their credit status, although the risk of more debts is constantly there.
Prepaid credit cards are more and more popular in the United Kingdom, and offer the chance to shop on the internet and globally with what looks like a regular credit card. They are even serviced by one of the main credit card giants for example Visa. However, rather than offer the card user a credit facility, the card may only be pre-loaded with their own money. Once these have been spent, it is the card holder’s responsibility to re-load the card with additional funds. The principle draw of this is that the card user doesn’t risk running into debt, as it is impossible to borrow using the card. On the other hand, there are a couple of drawbacks. For example, most prepaid cards do include some fees like purchase fees or monthly administration fees. These are usually paid with funds on the card.