How is a Secured Credit Card different from Prepaid Credit Card?

Those with a bad credit history and is looking for a credit card solution, can opt for both Secured Credit Card and Prepaid Credit Cards. But know in details about the features of both these cards before applying for one. Determine what features are most important that suits your financial situation and budget and measure them against the costs associated with each offer. Both Secured Credit Card and Prepaid Credit Cards require you to deposit amounts. Only after the amount is successfully deposited you are allowed to use these cards. Both the cards can be used to make purchases like regular credit cards. But here ends its similarities. The dissimilarities between a secured credit card and prepaid credit card are as follows-

Secured Credit Cards requires you to make a one-time security deposit against the credit limit before you get approval to use the card. You must make monthly payments on your card as you would on a regular credit card. The spending you make with your card goes against your revolving credit limit. Your deposited amount is placed in a saving account until your card is converted to an unsecured credit until you default on your payments. If you maintain regularity in your payments, the card issuer will often recompense you credit line without requiring you to add to your security deposit.
On the other hand Prepaid Credit Cards though are called credit cards, but they really are more like debit cards. There is no credit limit and your credit line depends on how much money you have transferred to the card, and it decreases each time you make a purchase. Once you spend the money from the deposited amount, you must redeposit money before you can spend again.
The fee structure also varies between secured credit cards and prepaid credit cards. A secured credit card charges fees typical of a credit card. You have to pay for application fee, finance charge, annual fee and late fee. If you use your secured credit card wisely, you will not be required to pay some of these fees. While prepaid credit cards have entirely different fee structure, depending on the card you choose. At the very starting you have to pay the activation fees and monthly maintenance fees. You may also have to pay a small amount while reloading money in your card or while withdrawing money from an ATM. Many prepaid cards are completely free. Using prepaid credit cards will never charge you interest and late fee.
If you want to improve your credit score, a secured credit card is the best option. Choose a secured card that reports to the major credit bureaus. If you make regular payments your secured card will be converted to an unsecured one after 12 months or less. While a prepaid credit card is a best option for those who can’t get a checking account or want to avoid banks. This card is a good choice for teenagers and students who get an allowance from parents.
National Asset Management offers highly qualified services of business debts collection and credit recovery services. Our purpose is to recover owed money, with specialist teams of Debt Collectors

Disadvantages of Using Credit Cards

A Credit Card is a system of payment that allows its holder to buy goods and services based on the promise by the holder to pay it later. If used wisely and responsively, credit card is not a problem. But if used unwisely can become a liability, especially if you make heavy purchases and lose control of your spending. While using credit cards if you don’t make timely payments or pay only the minimum amount due, you will fall into credit card debts which rise month by month. Following are some of the main disadvantages of credit card-
The biggest disadvantage is with the convenience and easy availability of credit cards you tend to spend more than you earn or your budget. If you go out shopping and see something that appeals to you but have not carried cash or can’t afford at this time you easily purchase the thing by using your credit card. And once you start doing un-monitored spending, the accumulated bills will make you fall into the debt trap. By making spending more than what you earn, you have to borrow from other sources to pay your credit card bills, but unwittingly creating much bigger burden as a defaulting borrower.
If you use credit cards but pay just the minimum amount each month than the debt will increase with time. Credit cards are considered by many as “free money” at the time and encourage one to use it without bound. But remember you will have to pay it today or tomorrow and the longer you wait, the more money you will owe since the credit card companies will charge you interest each month. Like this you pay more for purchased item than its ticket price if you include the interest paid.
Using Credit cards unresponsively can have a great effect on your credit rating. Consistently being late in making payments can damage your credit score. 35% of your credit score is your payment history. So, pay your credit cards bills on time to preserve your credit score. But just as using credit cards makes life easier, but also creates risks if stolen or falls into the wrong hands. It could take days before a stolen credit card charges can be cancelled and refuted-if your credit card issuer or company doesn’t have a good security system. So, before using or applying for credit cards fully understand the responsibilities that come along with it.
National Asset Management offers highly qualified services of business debts collection and credit recovery services. Our purpose is to recover owed money, with specialist teams of Debt Collectors

Exemption from wage garnishment

Wage garnishment one of the most common type of garnishment, used by creditors to collect debt, when debt becomes extremely delinquent. It is a Legal remedy authorised by the court and is considered a collection tool of last resort by the creditor. To get an exemption from the court, you must first

The first action to be undertaken by you to get exemption from garnishment is to report a mandatory written document with the country’s clerk office that has recorded court ordered garnishment against you. This financial disclosure will help you to prove that you have no disposable income that can be subject to garnishment. You must fill out a financial disclosure form, before the submission of any garnishment to your employer.

Following the hearing, the Debtor has ten days to fill out and file a financial disclosure with clerk of court office where the judgement is held. This is the initial step to be undertaken in purchasing a wage garnishment exemption.

Answer to question of the financial disclosure, where you need to answer why you feel you are exempt and give details. You also need to respond to queries referring the public assistance that you are receiving or may receive.

Fill up the economic worksheet which will clearly show that your earning is at or lower than the poverty level set forth by the federal government and include all spending your income is assigned to for exemption considerations.

Recording Phone Conversation with Debt Collectors

There are many harassing and abusive tactics a debt collector may undertake to refund the amount they have given. If you find the debt collector using illegal techniques and violating the Fair Debt Collection Practices Act in the dealings, you might collect proofs which will act as evidence against them or to turn the matter over to your State Attorney General’s Office. This can be done by using a mini recorder, or your computer, a microphone, the telephone listening adapter or a recording software and record the conversation with the debt collector.

While recording the conversation make sure that you mention the date, and the person’s name you are speaking with and to which collection agency he works for. This kind of evidences will prove successful and will go a long way in court making sure that you are not mistreated. This tactic often puts the person you are speaking with on the defensive. You are advised to use such tactic when the situation worsens after the conversation and the collector has broken the law.

Regardless of some state, it is illegal to record conversation without the permission of both parties. Twelve states have passed the law and made it illegal to record a phone conversation without all parties consent. While the other 38 states has declared legal to record a conversation as long as one party gives consent to the conversation.

Debt Recovery advice on Court Action

Approaching the court becomes necessary at the point where it is no longer possible to recover the debt through phone calls, or written documents sent to the debtor and the debt collection legal process starts. There was seen a recent decline in the number of claims forms issued between 1998-2004. But with the recent report the graph started to see an upward trend again. To make sure court action is the right course of action to be undertaken or not, one needs to consider certain points-

The primary concern is to think about the costs that you could incur in the process. The amount whether small or big must be given same deliberation.

Think twice before taking court action. It costs less for smaller debts and so is the risk. And more with higher balances.

Ensure that you have tried everything you can at the pre legal stage to recover debt and debtor details that will be invaluable in making your decisions.

Try to negotiate a mutual beneficial settlement with the consumer. Consider the long term value of the ongoing relationship and don’t take a short term view just to recover your money.

Negative effects of filing bankruptcy

While the aim of any bankruptcy proceeding is to provide debt relief to overwhelmed consumers, it is important not to lose sight of the possible negative effects of a bankruptcy. 

Regardless of any types, filing for bankruptcy may have long lasting negative effects on your credit record for up to 10 years. Some of the negative effects of filing for bankruptcy are as follows-

• Your financial details will be drawn and made available to the court and also to the creditors, which can have long lasting mental and social repercussions.
• Filing bankruptcy may lose your valuable or treasured assets, or even your business.
• It may become difficult to apply for future credit, getting house for rent, purchase a vehicle, and secure jobs that require a positive credit profile.
• Payments may be deducted from your pay checks for a long period of 5 years.
• The cost of filing bankruptcy may last long. As filing Chapter 13 bankruptcy remains on your credit history for seven years, and chapter 7 for ten years
• Banks or other credit companies may charge higher rate of interest and fees before giving loans.
• After filing petition for bankruptcy, the consumer debtors are required to attend credit counseling within 180 days
• To obtain a discharge, debtors should first complete a personal financial management education course.
• Filing bankruptcy may have severe negative impact on personal relationship. The pressure of bankruptcy leads to many separation or even divorce.

Spending Habits that Lead to Bad Debt

An individual’s spending habit is one of the main causes of bad debt. If people can recognize these habits early on they could save themselves from the stress and frustration of falling behind on their bills. Additionally they can save themselves money by avoiding late fees and other charges. One of the biggest mistakes consumers make is spending more money than they earn and/or have in their account. Some individuals forget that any expenses they place on their credit card they will have to pay back. They will just use their credit cards, savings and loans to make purchases beyond their means.

Individuals who find themselves in spending habits like these will quickly lead them into debt. A good way to avoid a spending habit like this is to make a budget for yourself. The budget will cover all of your expenses within your income. Another bad spending habit individuals find themselves in is making large purchases with their credit card or taking out a loan that they cannot afford. Spending habits like this will place you in debt automatically as you are utilizing funds that you do not have. Fees and charges added to credit card accounts and loans will increase your monthly payment making it more difficult to pay off your accounts and making it more likely to default.

The convenience of credit cards makes it difficult for individuals to use credit cards. They use their credit cards for every day purchases. This spending habit can lead to bad debt quickly if you do not keep track of your expenses and how much money you have in your account. Credit cards can make it more difficult to keep track of all of your bills and other expenses. Credit cards should be used economically. Individuals should get in the habit of paying with cash or their debit card so they can keep better track of their spending.

As we said before creating a budget for yourself will help keep track of your spending habits. With a budget you know exactly how much all of your bills add up to, how much your income is and how much disposable income you have left over. Individuals can take control of their spending habits by creating and living on a budget. If you find yourself using some of these bad spending habits or find yourself in debt consider creating a budget. You may also want to consider getting rid of your credit cards to avoid any temptations.

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