Due to the constant stream of credit card offers you receive in the mail or by telephone, few people understand that there are alternatives to these credit cards.

Listed here below are five of those alternatives to credit cards.

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.

The biggest difference between the two cards is that debit cards take money directly from your bank account rather than you getting a bill at the end of the month. You should be aware that debit cards do not protect against fraud as well as credit cards do, as a general rule. Another way to describe a debit card would be to call it an electronic check.

You can use Prepaid credit cards in the same manner as a regular credit card, however, you cannot carry a negative balance ever. You have to deposit money into your pre-paid credit card account before you can spend with it, this means that you ‘top-up’ this card the same way you do with pre-paid cell phones. This is a great way to control your spending or you could give one to a child to control their spending. Pre-paid credit cards are also safer than debit cards, if stolen because they could only spend whatever money was on it.

A better way to borrow money instead of using a credit card is the use of bank overdrafts in conjunction with a credit card. The limit on your overdraft is set by the bank; it will be set according to the amount you have deposited into your account each month and it does not have to paid off immediately, only when you want to do it. It gives you the ability to have your account go into the red or negative numbers. Many banks charge relatively high interest rates for overdrafts, but they rarely are as high as a credit card company’s and the better customer you’re considered to be, the better rates you’ll receive from your bank.

Another alternative to credit cards are the traditional loans. If you are planning on purchasing a single big ticket item at a fixed price, such as home improvements or a new car, it is probably better to try to get financing for your dreams through a bank or some other type of lender. If you consult with these types of lenders they will be able to extend a loan to you at a much better rate of interest than a credit card company’s and they can help you set up a repayment plan to better fit your budget.

The last alternative to credit cards to be listed here is credit unions. Credit unions are very much like banks, only more local; they are formed as a co-operative and owned by their members and run by the community, thus they are a good place to borrow money. The reason this is a good place to borrow money is because credit unions are limited by law on how much interest they can charge and they do not need to make a profit for shareholders or their owners, since they don’t have any. Credit unions are a solid alternative and well worth looking into, if there’s one in your area.

Visit JSNet.org for more information on credit cards including great deals on student credit cards

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