Did you get an easy credit card in college? Or, are you someone who got
one for the convenience of being able to pay without cash? Not aware of
other easy ways to borrow money?
Millions of us do this thanks to the unavoidable advertising of the
credit card industry. Few people realize just how many alternatives to
credit cards there are. There are others ways of using credit without
finding yourself swimming in credit card debt.
Let’s 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
(and big) 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 also avoid the accumulation of credit card debt using these
types of cards. 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 can’t
have a negative balance and you have to put money on the card before
you can spend it. This card is great if you want to know how much you
are spending not to mention that you have no recurring credit card debt
each month. They’re also safer than debit cards since someone who stole
the card can only spend whatever money is 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 alone. Your
overdraft limit is set by the bank according to how much you deposit
into your account each month plus you don’t need to pay it off until
you want to.
Basically, it just gives your account the ability to go into negative
numbers. Many banks charge relatively high interest rates for
overdrafts but rarely are these rates as high as a credit card. They
will give much better rates for good customers.
Real Loans.
When you’re buying one big item at a fixed price (like a car) or spend
all your money on one type of thing (home improvements, for example),
it’s worth budgeting it all out and going to a bank or a 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.
They can set regular monthly payments for you to repay it.
Credit Unions.
Credit unions are like banks, only more local. They are cooperatives,
that is, owned by their members and run by the community. They are a
great place to borrow money because there are limits in law on how much
interest credit unions can charge. They also don’t need it to make a
profit for owners or shareholders, because they don’t have any. They
are well worth checking out if there is one in your area.
