Payment options emerge for consumers wary of more debt

Posted on December 25 2009 by admin

Payment options emerge for consumers wary of more debt

For consumers who are struggling to pay down their debt, especially when it comes to credit cards, a variety of new payment options are coming up in light of current economic conditions.

For example, this holiday season marked the return of the layaway plan for many retailers, while surveys consistently found that people were more inclined to use their debit cards or cash for gift shopping as opposed to their credit cards.

One of the main themes of the shopping season this year was avoiding additional credit card debt.

With that in mind, a recent Wall Street Journal report noted that a growing number of consumers have also been using prepaid credit cards. In fact, the newspaper noted that government agencies have been using these cards to distribute benefits and wages, while private companies have also been using them for employee payroll purposes.

The newspaper also noted that the total market for prepaid cards, which do not have to be linked to a specific bank account, stood at about $247.7 billion last year, marking an increase of about $27 billion from 2007.

Of course, the cards may also come with drawbacks for some consumers since some of them carry certain fees for activation or usage.

However, recent changes to federal credit card laws mean that consumers in general should get used to more fees. This is because in many circumstances, credit card companies no longer enjoy the flexibility they once did to saddle customers with punitive interest rates and high late fees. The companies had become increasingly dependent on such methods in recent years to boost their profit margins, much to the chagrin of consumer advocates and customers who faced greater difficulty managing their debt as the recession set in.

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Consumers have a variety of payment options that don’t involve credit.

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