Credit cards can be a great financial tool if you’re careful with that. However, credit cards are not suitable for those with bad credit, which ultimately prevents them from qualifying for another card. Or it could be that you just want to avoid high-interest credit cards altogether and you don’t wanna be indebted anymore. Fortunately, it’s not the end of the world as there are plenty of other alternatives that we’ll be more than happy to share with you in this article.
Some of the finest alternatives include debit cards, online payment, Canadian loan aggregators, gift cards, overdrafts, and so much more.
Here are some of the finest alternatives to credit cards, where people no longer have to worry about borrowing from others or worry about interest rates ever again in their entire lives:
- Debit Card
Debit cards are arguably the most popular credit card alternative compared to carrying physical money. You can especially carry a debit card that carries the logo of a major credit card wherever cards are accepted. Not only is it convenient for you to carry, but you also won’t be in debt as the card is linked directly to your checking account. And the best part about it is that you’ll only spend on what you have.
Still, there are some things that you need to be wary of – such as fraud protection. However, you should know that the duration for reporting fraudulent purchases as well as getting your money back is less than what you’re given with a credit card. If you’re not careful about this, then using a debit card is no less risky than using a credit card.
- Prepaid Debit Cards
These cards greatly resemble credit cards and also work in that manner as well. The only difference, however, is that the credit limit for these cards is only up to the amount that is loaded by the users. Still, the advantage presented by prepaid debit cards is that stacking up credit card debt is impossible. The downside, to this, nevertheless, is that the cards aren’t reported to credit reporting agencies, and can’t do anything to improve a user’s FICO score.
- Gift Cards
Most retailers offer users gift cards that can be sent to their family and friends. Retailers issue gift cards that can then be used at another one of their branches. Some cards feature a major credit card company’s logo, and can then be exchanged for products and services at those stores that support cards with that logo.
There are also cards that can be preloaded with funds. They can be used like other debit or credit cards. Fortunately, when the funds get loaded into the cards, you can’t go into debt.
If you maintain a good relationship with your bank, they might be able to loan you a little bit of extra cash. To do this, all you have to do is apply for an arranged overdraft as an extension of your current account. You’ll be able to withdraw to a certain agreed limit when the balance is negative.
Certain banks offer this option free of interest to an agreed term or a certain amount, based on separate circumstances. If you do end up choosing an overdraft with an interest, as well as have a plan on how to clear your debt, then you have to be aware about how much this is going to cost you.
- Electronic Wallets
For those who have a smartphone, they’ll be able to conduct financial transactions at retail establishments and also for transmission of funds to and from family members and friends. Some of the best known electronic wallets include Google Wallet and Apple Pay. These cards are beneficial because consumers can include information from several of their debit, prepaid, or even credit cards. In other words, there is no need for any physical cards.
- Third-Party Payment
Why not simply disregard credit cards altogether? We’re talking about third-party payment options including PayPal, Google Checkout, and others. What’s interesting is that you don’t need to provide personal information to individual vendors apart from linking your checking account to the payment system.
Even better is that you get a temporary “credit card” number that you can only use online. The reason why this is better is that this number can only be used one time after you use it. And this way, hackers won’t even be able to use that number should they attempt to get the drop on you.
This is what makes this option one of the best credit card alternatives around.
- Personal Loan
If you’re unable to access some of the best credit cards using low-interest rates or 0% periods, especially if you’re considering the holiday of a lifetime or want to make some home improvements then you should consider taking out a personal loan. This could be cheaper for you, especially if you’re able to secure a favorable interest rate.
Of course, the amount that you’re able to borrow and at what rate will depend on several circumstances. Apart from knowing how much loan to pay back, and also knowing that you’re able to confidently afford repayments, you need to be wary of late fees and early repayment that can potentially bump up the borrowing cost.
- Secured Credit Cards
If you’re struggling with damaged credit and are unable tosecure a credit card, then it’s best to opt for a secured one instead. This can help you get your credit back on the right track. Unlike prepaid debit or credit cards, secured credit cards are considered to be real credit cards. But, the limit for secured credit cards is dependent on the amount that users have deposited, which is a sign of implementing financial discipline.