Best Alternatives For Credit Card Haters

Unless you are well disciplined in money management you can get into serious financial trouble through the misuse of credit cards. Although credit cards have become one of the most useful tools in the easy transfer of money from a buyer to a seller in so many different areas, it is hard to imagine a life without them, but this need not be so. It is possible to still enjoy the same ease of purchase without being exposed to the high interest rates credit cards universally attract, if you fail to pay your full account when it becomes due each month.

When thinking of an alternative way to pay your way through life without using a credit card your first thoughts may go to cash but this is no longer practicable. The advent of online shopping has put all but an end to cash transactions for good. It is now more likely we will see the end of cash transactions altogether before the demise of plastic money. Besides it is not a good practice to carry large amounts of money around with you for fear of theft or loss. Plus carrying cash also entails a personal visit to a bank branch to deposit and withdraw funds, a feat that is becoming increasingly impractical with the number of branch closures taking place around the world, only to be replaced with ATMs.

Luckily there are still a number of alternatives available to you if you hate the idea of using a credit card, including:

● Debit Cards

● Prepaid Credit Cards or Store Cards.

● Secured Credit Cards.

● PayPal.

● Subprime Credit Cards.

● Personal Loans.

● Peer to Peer Lenders.

Debit Cards

Debit cards are the most obvious alternative to a full blown credit card. A debit card with a Visa or Mastercard logo on it will give you all the benefits you can get with a credit card except that once you've reached the amount in your transaction account there will be no more money available until you deposit more. Much the same occurs when you reach your credit card limit, but many providers will allow you to go over your limit not to save you the embarrassment, but so they can charge you more fees. In the case of a debit card, however, there will be no interest charge to worry about. Neither are there any monthly fees associated with debit cards except those you may already be paying on your transaction account.

Prepaid Credit Cards

Prepaid credit cards make shopping easy, just as easy as when you use a credit card, but you set your own predetermined level. When the credit you had deposited in the card runs out your shopping stops with it. This means you cannot go over your limit or attract interest charges. You can charge the card up with any amount of money you like. There may be monthly fees to pay, depending on the card provider and there is usually a small activation cost involved.

Secured Credit Card

Secured credit cards involve a line of credit that the card provider adds to the amount you deposit in the account. You don't actually spend your own deposit money but instead spend the line of credit that has been afforded to you. The card has to be paid monthly and interest fees are also involved, usually at a higher rate than a credit card.

PayPal

PayPal, the online company owned by eBay, allows you to connect your own credit or debit card to your PayPal account to make online transactions that much easier and safer. PayPal also has its own debit card that carries a Mastercard logo which is linked to your own transaction account. This card can be used anywhere Mastercard is accepted as a normal debit card carrying the same logo. It also gives you a one percent cash back on purchases made with the card.

Loans

Personal loans have been replaced in many instances by credit cards but loans are making a comeback for many of the larger transactions such as those above $5,000. It is possible to get personal loans for smaller amounts but you will be charged a higher interest rate.

Peer-to-Peer loans can be arranged online through organisations such as Prosper, Lending Club and Kiva. They offer different amounts of cash, some as low as $25, over the internet. You will be charged a small fee for this service and some of these organisations insist that your credit score is at a certain level before you will be accepted.

Good Reasons to Hate Credit Cards

The Reserve Bank of Australia has reported that the credit card debt carried by card users in Australia alone was $50 billion. It also released findings that most of these people didn't clear their outstanding balance each month. This is a worrying trend when you consider that most of this outstanding debt would be attracting interest at the rate of between 18 and 22 percent. For those only paying the minimum required each month the situation would be quite dire in that they could be facing a lifetime of interest repayments. The original debt itself could possibly never be cleared.

It can be a better option, in many cases, to borrow the money you need from family or friends. In this way you may even avoid having to pay any interest at all. If you can't obtain the money you need in this way it may be worth your while to re-consider if you really need to make the purchase at all. Can you live without having to borrow? You may surprise yourself how many times you might change your mind and answer 'yes.' Another way of buying what you want is the old fashioned lay-by system where you pay a small holding deposit and then make regular repayments until the object you are buying is paid for and you take possession of it.

However, if we all started saving at once and stopped using credit cards or loans, the country would come to a halt, manufacturing would stop and unemployment would sky rocket. Just borrow carefully, live within your means and we can strike a happy medium.

This article was written by Timothy Ng. You can read more of his work at LifeInsuranceFinder.com.au where he has a number of comprehensive guides to life insurance.