Alternatives to Credit Card Use
While a credit card can be a great financial tool for some, there are those who do better without credit. In some cases, it is best to avoid credit card use altogether. If you have a history that shows credit cards are just too tempting, or if you have had difficulties with debt and prefer to stay away from it, it makes sense to look for alternatives.
Some people are simply opposed to credit and debt in any form, and prefer to pay with money that is entirely theirs, rather than borrowed (even for a short time) from someone else. Of course, there’s always cash; but cash can be inconvenient, and you have no way to get it back if it is stolen. If credit cards aren’t for you, and cash is too burdensome, there are alternatives to their use:
When you don’t want the inconvenience of cash, the obvious alternative to a credit card is the debit card. You can use a debit card carrying a major credit card logo at anyplace cards are accepted. It is convenient, and you don’t run the risk of getting into debt since the card is connected to your checking account, and you can only spend what you already have.
However, you do have to be careful. There are fraud protections that come with debit cards, however you should be aware that the time limit for reporting fraudulent purchases and getting your money back is shorter than what you have with a credit card. Otherwise, using a debit card is a lot like using a credit card – but without the interest charges, annual fees, or over-the-limit fees.
In order to limit a potential fraudster’s access to your checking account, you can get a prepaid debit card. You load it with an amount of money, and are limited to spending that amount. You can add more money as needed. The money is yours, you aren’t using debt, and you don’t have interest charges. However, you get all the convenience of using a card rather than carrying cash.
You do need to be careful, though. Prepaid debit cards often come with a lot of fees. These fees can be charged when you reload the card, and prepaid debit cards are notorious for monthly fees. So, even though there are some protections, you might have fees to pay that can offset the advantages.
Online: Third-Party Payment
If you want to pay for something online without using credit cards, there are third-party payment options. Google Checkout, Paypal and others can also provide you with the ability to pay from your checking account without providing personal information to individual vendors (although you have to link your checking account to the payment system). You can also get temporary “credit card” numbers to use online. The money will be taken from your checking account, but the number is a one-time number that expires after you use it. This way, a hacker can’t use the number after you are done with it.
The Future: Digital Wallets
The so-called “digital wallets” are coming. While you can save credit card information to these wallets (usually a smartphone or other electronic device), some are expected to provide access to a PayPal account or even your debit card. Once the infrastructure is in place, you will be able to choose a mode of payment and then simply wave your phone in front of a reader to complete the transaction.
As you can see, there are a number of opportunities to pay without using a credit card. Carefully consider your situation, and then decide what mode of payment is best for you.