What Are the Alternatives to Credit Cards?

What is your reason for having a credit card? Is it for the convenience and not having to carry cash? Or, maybe it is for establishing a credit rating. Are there any reasonable alternatives to credit cards?

Let’s face it, the credit card companies are constantly bombarding us with advertising, it is completely unavoidable for us to not see these ads on a daily basis.

Let’s look at some reasonable alternatives to credit cards.

#1)       Debit cards are a great alternative and are widely accepted by retailers. In fact, if a retailer does not accept debit cards then they probably do not accept credit cards either.

The debit card takes money directly from your bank account. The chance of fraud is higher with debit cards, but they are getting much better at fraud prevention.

#2)       Pre-paid credit cards are like credit cards except that you have to put money on the card to use it. They are great to use as gifts as well. These cards are rather safe because if they do get stolen, then only the amount on the card is vulnerable.

#3)       Credit Unions are similar to a bank but are more locally centered. Laws are in place that limits how much interest they can charge. They are run by the community and are owned by their members. Credit Unions are a cooperative and worth looking into.

#4)       Bank Overdrafts are another way to borrow money rather than using a credit card. The bank sets the overdraft limit and you are charged a monthly interest rate if you use it. The rates can be quite high but often not as high as credit companies charge on their cards.

#5)       Getting a loan is the last of the alternatives to credit cards that we will cover in this article. Loan rates are much lower than credit cards. You will get set monthly payments in which to pay back the loan.

As you can see here, there are a number of alternatives to credit cards. Many people run into financial problems associated with the very high rates that many card companies set. They are a convenience, but easily abused.

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