If you are not interested in the credit card offers that seem to come in a constant stream through the mail and by way of solicitors on the phone, there are viable alternatives to consider.
There are five of the alternatives to credit cards listed below.
Debit cards are one alternative to credit cards that has been in operation for a number of years in many European countries, but are relatively new in other places. Debit cards are like credit cards in their looks and usage and are accepted at nearly every place where credit cards are accepted.
A big difference between debit cards and credit cards is that debit cards just take the money directly from your bank account and credit cards send you a bill at the end of the month. You should know that you aren’t as well-protected from fraud with a debit card as you will be with a credit card. Another way to describe a debit card would be to call it an electronic check.
Prepaid credit cards do not allow you to carry a negative balance, although these cards work just like regular credit cards do. Just like with a pre-paid cell phone, you have to ‘top-up’ the card by depositing money into your card’s account before you can use the card for expenditures. This is one way to control your spending or you may want to give one to a child to help control their spending. Pre-paid credit cards are more safe than debit cards are and if stolen, only the money that is left on it can be spent.
When used in conjunction with a credit card, bank overdrafts can be a far better way to borrow money than using a credit card. When you use a bank overdraft the bank sets the limit on it, in accordance with the amount you deposit into your account each month and you do not have to pay it off until you want to pay it off. This allows you to let your bank account go into the red or have a negative balance. A relatively high rate of interest is charged by many banks for an overdraft, although they are rarely as high as that charged by credit card companies and when the bank considers you to be one of their better customers, you may be given an even better overdraft interest rate.
One of the most commonly used alternatives to credit cards are traditional loans. It is wise to contact a bank or another type of lender if you are planning to purchase a big ticket item like an automobile or improvements for the home to see if they can help with financing. These lenders will be able to grant you a loan with a much lower interest rate than a credit card company could and they can also help you to set up a repayment plan that is suited to your ability to pay.
Credit unions is the last alternative to credit cards to be listed in this article. A credit union is just like a bank, but one that is more local; a credit union is a co-operative owned by it’s members and run by the community and it is a great place to borrow from. Credit unions do not have any owners or shareholders they want to make a profit for and they are limited by laws on how much interest they can charge borrowers, so this is a great place to borrow money. If there is a credit union in your area, it can be a solid alternative for borrowing and worth looking into.
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