Can Britain Survive Without Credit Cards?

Credit cards are used widely around the world, and most adults in Britain have credit card debts. According to latest surveys on personal debt, each household now has around £40,000. Indeed, this does not mean that every household carries that level in debt, yet indeed the levels are high. Credit cardsplay a sifinifant role of regular consumer debt although they are becoming harder to apply for.

Since the financial downturn and the new approach by the government to clean up the country’s financial books, financial institutions are forced to adhere to much tougher rules regarding loans and credit cards. The previous government is frequently accuse for the severe situation in the country, with economic problems to rival those of Ireland and Portugal.

So, should people take a new credit card when they know that there is an existing debt problem to repay? The fact is, credit cards are hugely vitalfor many aspects of everyday life: large purchases such as cars and property can only be made with the aid of plastic money. Many internet companies solely accept credit cards, as do hotels. Lots of firms do not even accept debit cards – therefore, what choice do consumer have?

Luckily there are plenty of types of credit cards, ranging from ‘free’ prepaid credit cards to luxury cards and corporate cards. The choice is massive, so the majority of people have an option. For instance, a person who has problems being accepted for a loan or other personal credit product at the regular bank can now apply for a bad credit credit card. This type of card generally carries a low credit limit, but rewards the card user with more purchase power and in many cases there are extra features such as a credit builder. This is designed to help the card holder rejuvenate their credit rating, although the risk of further debts is constantly there.

Prepay cards are growingly in demand in Britain, and offer the chance to shop online and around the world with what looks like a regular credit cards. They are even served by one of the main credit card firms for example Visa. However, rather than offer the card holder a credit facility, the card may only be pre-loaded with their own money. Once the funds are used up, it is the card holder’s responsibility to re-load the card with further funds. The main plus point of this is that the card holder doesn’t risk landing in debt, as it is impossible to borrow using the card. On the flipside of the coin, there are a couple of minor sides. For instance, the majority of prepaid cards do include some fees such as purchase fees or admin fees. These are generally paid with funds on the card.