Alternative Options to Credit Cards

14 October 2009

Credit cards play a major role in many activities and transactions that occur daily, from booking flights to buying online to proof of identity. Yet for those who either do not want to have a credit card or aren't eligible for one, they do have alternatives with a range of great options available.

Debit Cards

Perhaps the most popular and well known alternative to credit cards, debit cards are surging in popularity due to their flexibility while eliminating any chance of accumulating debt as the funds are sourced solely from the customers established bank account. Besides having the same flexibility as credit cards, debit cards are also able to build a line of credit for the account holder, although this will incur the same fees that this actions has with credit cards.

What's more, debit cards have the same level of on security as credit cards to protect against any unauthorised or fraudulent transactions. Debit cards also have the charge back feature that protects the cardholder against retailers who deliver items of substandard quality.

Prepaid Cards

Similar to debit cards except that instead of being linked to an established bank account the card has a prepaid balance put on it that the cardholder charges to. This means that people who don't even have a checking or savings account can use a form of online payment system. Often very popular for teens with no financial history as their first move into the personal finance industry, prepaid cards are one way to for a person to learn financial responsibility while avoiding any chance of over spending or debt.

Store Credit Cards

Are exactly what they sound like, they are cards that you buy from individual stores that allow you to put money on them and charge purchases as you go. Department store credit cards are probably the most common form and act much like regular credit cards in that a person can purchase items on the card, with the store holding them as collateral and reserving the right to repossess any items the customer cannot pay for. They don't require any checking accounts or a credit check on the person applying.

Secured Credit Cards

Available in several markets, these credit cards are linked to larger lines of credit such as home loans. They operate by allowing the cardholder to make purchases which are then secured by the home itself. Obviously not a first choice for many people, this is not a widespread offered across most markets. There are also credit cards that are secured by your bank account with the lender. This works by linking the credit card limit with the amount in that allocated account. If the cardholder falls behind in payments, the money is simply kept from the allocated account.

Of course if you are looking for financing there are also personal loans to consider which can have far lower interest rates attached than most credit cards.

These alternatives to credit cards are ideal for many people who are not able or interested in credit cards as a means of finance. While some are not for everybody, options such as debit cards are a highly viable alternative for people wanting the same features of a credit card, but without the negatives. What they provide is the same global acceptance and convenience as major credit cards without the pitfall of personal debt that can easily spiral out of control.

CreditCards.com.au is an Australian owned information provider on Australian credit card products. Please use our Compare the Top Ten Credit Cards table to find the right credit card for your financial needs.

We cover a wide range of credit card services provided by credit cards companies through the banking and financial sector.

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