This is a guest post by David Silverstone who writes about personal finance, credit cards, and debit cards on the website, Credit Card Insider, which is a credit resource, providing plain-language guidance from industry leaders.

Credit card debt is huge in the U.S. Last year, the average American household’s credit card debt was equal to $15,799. American consumers know that they need to eliminate this debt, but they also know that they will have large purchases to make in the future.

These larger purchases may be necessities, such as refrigerators, new cars and houses, but it can also be a pleasurable expense, such as a fabulous dream vacation. The new trend is to save for these purchases so that consumers do not have to use their credit cards, and some people are choosing to embark on this adventure by engaging in reverse budgeting using prepaid debit cards.

What Is Reverse Budgeting?

Reverse budgeting is way in which people save for their purchases without having to resort to burdening themselves with more debt. First, consumers decide how they would like to use the money they are going to save. Then, they will calculate how much money they will need to pay for their dreams. The next step is to determine how much money they can set aside per month to save for their goals.

Reverse budgeting has been growing in popularity, and the reason may be because so many Americans already owe so much money to their creditors. One way that people have begun to save for future purchases is to obtain prepaid debit cards.

How Do Prepaid Debit Cards Work? 

Prepaid debit cards are an extremely convenient way to make purchases, and they prevent people from spending more money than they have. Furthermore, it’s really easy for consumers to add funds to their prepaid debit cards and even adding money to the best prepaid credit cards and increase their prepaid spending limits every month.

After they have succeeded in saving the amount of money they needed for their goals, they can use their cards to pay for the item online or inside the store. They can also use them to pay several different bills online.

Advantages of Prepaid Debit Cards

Prepaid debit cards do have their advantages and disadvantages. Consumers like credit cards because they eliminate the need to carry a large sum of cash. Those who would like to keep from adding to their credit card debts cannot resort to using credit cards, but if they have a prepaid debit card, they can travel all over the country or even outside of U.S. borders and have a safe method of payment that is widely accepted.

The amount of money that is on the prepaid card is all that consumers can spend. If they were to try to purchase something outside of their budgets, the card would be denied.

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