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A New Approach To Money Management (UK)

The signs have been on the wall for years in the UK: Due to increasingly poor economic conditions, many households are knee-deep in debt and no longer capable of making their usual mortgage, credit card, and bill payments.

Unemployment hasn’t helped and neither has the pervasive rise in the cost of living. Especially those who were lured into borrowing thanks to previously easily available credit have suddenly found themselves unable to manage financially.

As a result of these devastating developments, a lot of people have now got a poor credit history, which makes things exceedingly difficult when trying to get credit in the future. What’s more, it even makes it hard to open up a new bank account.

In short: More and more people have started to keep an eye out for a new approach to money management. And they have found one, opting for prepaid cards as their favourite payment tool.

Easy and hassle-free

The main reason why prepaid cards have caught on so quickly is the easy and hassle-free application procedure associated with them. When applying for a traditional current bank account, the bank will usually carry out a credit check.

This is an in-depth look into your finances, often associated with unpleasant questioning and for those who have missed payments, this will usually preclude them from opening a bank account altogether.

As a consequence, anyone with even a small amount of debt may no longer be able to get themselves a credit- or debt-card and find it hard to maintain a business. The good news is that there are other options.

How a prepaid card works

A prepaid card is much like a debit card in that it can be used at many retail outlets and for online purchases. The difference is that you load money onto the card and the balance is reduced each time you make a purchase or pay a bill with it.

This makes things much easier for those who can’t get a debit card or any credit. A prepaid card allows you to set up direct debits from it, withdraw money from a cash point machine and you will also be able to manage your account twenty-four hours a day. You can load money onto the card via a variety of methods including online, by ATM, at the Post Office or over the phone.

A prepaid card as a money management tool

As mentioned, a prepaid card is good for anyone with a poor credit history. But over the past few years, many in the UK have discovered that prepaid cards make sense for a plethora of other reasons as well: A parent might want to get their child a prepaid card to allow them some financial freedom whilst knowing that they cannot get into debt as once the balance hits zero there is no more money available, for example.

A prepaid card is also great for when you go on holiday. It is a safe way of taking money abroad and is usually replaceable should you lose it or get it stolen. And if you’re abroad for a longer period of time, you should seriously consider a travel card, which is a specialised prepaid card for vacations – this locks the currency rate on the card and means you no longer need to fear wild currency fluctuations which can costs you a lot of money.

Most importantly, a prepaid card can help you manage your finances by preventing you from going into overdrafts, taking up new debt, making you aware of your spending patterns and alerting you should your balance fall below a critical level.

This way, a prepaid card will question your payment patterns and help you find new, innovative ways of spending your money on the things you really need.

Choosing the right card

The market for prepaid cards in the UK has grown tremendously because of how effective it is for managing money. The fact that you cannot get into debt is very attractive for people and it also acts as a way of saving money to pay off bills, to keep it separate from your other finances.

The drawbacks of a prepaid card are the fees: Depending on which card you’re applying for, there can be a one-time application fee, top up fees and even a monthly fee. You don’t earn any interest on the money on the card either.

What this means is that you will need to invest some time into selecting the right provider and learning all about the differences between the offers available to you.

Fortunately, as the market has developed and more and more competitors have flooded it, fees have steadily gone down. As a result, for many, the pros outweigh the cons and the prepaid card is proving an increasingly popular way of managing money.

If you, too, are looking for new ideas for managing your money more efficiently, the prepaid card is an excellent choice.

The Direct Impact of the Recession on Personal Finances

The current financial climate in the UK represents a really testing time for a lot of people. The main issues that people are worried about from a financial perspective are related to job security. There have been so many cutbacks in recent times that very few people in either the private sector or the public sector feel genuinely confident that their jobs are safe for the foreseeable future.

Of course, a lot of people have already fallen foul of the continuing financial struggle being experienced by businesses and organizations across a very wide spectrum of different industries.

Read also: Prepare to apply for business loan

Unemployment and debt

Those that have found themselves out of work range from all kinds of professional backgrounds and personal circumstances. As a result, a lot of people with a huge number of commitments have found themselves without the means to actually pay for those commitments.

Where they once could rely on a steady income and a stable professional future, they have suddenly found themselves without an income and in a precarious situation in terms of getting back into work, which is difficult in the current climate regardless of skills and experience.

Unfortunately, the world does not stop spinning when you find yourself out of work and your commitments continue to cost you. Money comes out of your accounts at the same rate even though there is very little coming in. In many cases, this leads to a situation wherein you simply cannot pay your debts on your mortgage, your defaulted credit cards and a whole host of other payments that you make each month.

A personal impact

If you do not manage to get back into work as soon as you had hoped then the debts can mount up. Creditors are rarely lenient at the best of times and they can pile on the pressure in difficult financial periods like the one currently being experienced across the board in the UK. This only serves to compound the ill-effects of your situation.

It should come as little surprise that debt management companies are seeing more and more cases of people who as little as a few months ago were perfectly affluent, but who now find themselves with uncontrollable levels of debt because they have had their income slashed by the loss of a job as a direct result of cutbacks.

Rising levels of debt and unemployment across a wide spectrum of industries are just a couple of examples of the personal impact of wider financial issues affecting the UK and many other countries in Europe and beyond.

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