Credit cards can provide a high level of convenience, but they can also lead to debt that could take years to pay off. You could say that they are a necessary financial tool, but a very dangerous tool (if they are used incorrectly).
Most people have at least one credit card in their wallet. Even if they do not use it all the time, they keep it on hand for making online purchases or for covering unexpected expenses. However, there are now plenty of credit card alternatives that can help consumers rely less on their cards.
Online personal loans
Online personal loans are very convenient. You can apply for one on the internet and get an answer in an hour or less. In many ways, the application process is even easier than it is for a credit card because the best online loan providers only ask for a bank statement and pay stub. They are not concerned about your past credit history, only about your current ability to pay off the loan.
As long as you pay off your loan on time, you will not be stuck with the same kind of debt that can easily occur if you keep a balance on a credit card.
Debit cards
One of the main reasons that people get credit cards is because they want to make online purchases. Debit cards can also be used for this purpose. The one main drawback for debit cards is that the money is drawn out of your account immediately. This means that you must have money in your account to spend before you make a purchase. This drawback is actually an advantage as far as personal finances are concerned because it will protect you from getting into debt by spending more money than you have.
If you do not have a traditional bank account, you can get a prepaid debit card. As long as you register it, you should be able to use it to make online purchases.
A creative way to use gift cards
If you shop at the same places often, you can get another type of credit card alternative: gift cards. These can be used just like a debit card, but they can only be used at a certain place. Most can also be used to shop at the brand’s online store.
The main advantage of these gift cards is that you will not get hit with overdraft fees. If you do not have enough money on the card, you will simply have to cover the difference with cash. In this way, you can use gift cards creatively to stick to your budget. Once the money on the card is gone, you cannot spend any more until the next week or month.
With these three tools, you can get many of the same advantages that you would get from a credit card without the dangers of debt.