Alternatives to Credit Cards
Are you one of those people who only
ever got a credit card for the convenience
of being able to pay without cash, or because you
weren't aware of any other easy way to borrow money?
Millions of us are, thanks to the unavoidable advertising
of the credit card industry, and few people realize
just how many alternatives to credit cards there are.
Lets take a look at a few.
Debit Cards.
Debit cards are often used in many European
countries, but are relatively unheard of elsewhere.
Basically, they re just like credit cards and are accepted
everywhere credit cards are accepted the only difference
is that they take any money you spend directly from
your bank account, instead of you getting a bill at
the end of the month. You should be aware, though,
that you aren't as well-protected from fraud with a
debit card as you would be with a credit card.
Pre-Paid Credit Cards.
These are cards that work just like
credit cards, except that you cant have a negative
balance you have to put money on the card before you
can spend it. That means that you top-up the card,
like you would a mobile phone. This is good if you
want to know how much you're spending, not to mention
that you can even give the cards to children. They're
also safer than debit cards, since someone who stole
the card could only spend whatever money was on it
at the time.
Bank Overdrafts.
A good bank overdraft, used together
with a credit card, can be a far better way of borrowing
money than using a credit card. Your overdraft limit
is set by the bank according to how much you gets
paid into your account each month, and you don't need
to pay it off until you want to.
Basically, it just gives your account
the facility to go into minus numbers, if you want
it to. Many banks charge relatively high interest
rates for overdrafts, but rarely as high as a credit
card and they will give much better rates for good
customers.
Real Loans.
When you're buying one big thing at a
fixed price (like a car), or you're going to spend
all the money on one type of thing (home improvements,
for example), its worth budgeting it all out and going
to a bank or another loan company. They'll be able
to lend you the money at a much better rate than a
credit card would, simply because they know why you're
taking the loan and can set regular monthly payments
for you to repay it.
Credit Unions.
Credit unions are like banks, only more
local. They are co-operative, owned by their members
and run by the community, and are a great place to
borrow money. This is because there are limits in
law on how much interest credit unions can charge,
and they don't need to make a profit for owners or
shareholders, because they don't have any. Its well
worth checking if there's one in your area.
Gordon Goh is the owner of Easy
Credit Card Guide.com offering free credit card
information for everyone. You can receive a free
credit card at http://www
.easy-credt-card-guide.com
