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The Countless Alternatives To Credit Cards
By: Kevin Erickson
Thanks to the constant stream of credit card offers you receive in the mail or
through television few people understand that there are viable alternatives.
Below are five of those alternatives.
1. Debit Cards
Debit cards have been used in many European countries for a number of years, but
are relatively new elsewhere. In a nutshell, they are just like credit cards and
are accepted in most places where credit cards are accepted. The biggest
difference is that they take money directly from your bank account rather than
you getting a bill at the end of the month. However, you should be aware that
you aren’t as well-protected from fraud with a debit card as you would be with a
credit card. Another way to describe a debit card would be to call it an
electronic check.
2. Pre-Paid Credit Cards
These cards work just like credit cards, except that you're not allowed to carry
a negative balance. You deposit money into your card account before you can
spend it which means that you ‘top-up’ the card... like you do with pre-paid
cell phones. This is great way to control your spending or you could give one to
a child to control their spending. They are also safer than debit cards, if
stolen because the their could only spend whatever money was on it.
3. Bank Overdrafts
Bank overdrafts used in conjunction with a credit card, can be a far better way
of borrowing money than using a credit card. Your overdraft limit is set by your
bank according to how much you deposit into your account each month. You don’t
need to pay it off until you want to.
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
rarely as high as a credit card companies and the better customer you're
considered the better rates you'll receive from your bank.
4. Traditional Loans
When you plan on purchasing a single big item at a fixed price - like a car or
for home improvements it’s worth budgeting it all out and going to a bank or
other type of lender. 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.
5. 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.
The reason is because there are laws that limit 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. It’s a solid alternative and well worth looking
into if there’s one in your area.
About the Author:
Kevin Erickson is a contributing writer for: http://www.debtmgmtresources.com,
www.aneyeondebt.com and
www.debtmergeresources.com. This article
may be reproduced only in its entirety.
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