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Which Type Of Credit Card To Choose?
If you are worried about getting a credit card or have a credit card and it is not working out for you, then maybe you should look at some of the alternatives on offer. There are a growing number of card alternatives to credit cards, some of which may be a better option for you.
Why look at alternatives?
There are plenty of reasons why looking at credit card alternatives are a good idea. Although credit cards have their uses, they also have many dangers and problems. Credit cards tempt you to spend more than you can afford, and then the high interest rates mean your debt increases quickly.
Credit cards can also be difficult to get if you have poor credit or you are young and have never borrowed before. Therefore, it pays to look at the alternative card options.
Charge cards
Charge cards are the most popular alternative to credit cards. Although many people believe that cards like Diner's Club and American Express are credit cards, they are in fact charge cards. Charge cards are similar to credit cards apart from the fact you have to pay the balance off in full before a set time period expires. This is useful for people who know they can pay balances off each month or couple of months.
Credit limits on charge cards can be high, which is good if you need to make an expensive purchase. The problems with charge cards are that they are not as widely accepted as credit cards, and if you do not pay the balance off the interest rates and charges are extremely high
Debit cards
Another alternative to credit cards are debit cards. Debit cards can be used in much the same way as a credit card, but instead of having credit and paying money off each month, debit cards take money directly from your bank account. You can only spend the amount that you have in your account.
The value of debit cards is that you do not overspend, because you are only spending what you can afford. There are also no interest rates because you are not borrowing money. Debit cards are also as widely accepted as credit cards. The problem with a debit card is exactly its strength; you cannot spend more than you have. This is a problem if you need to buy high value items. Also, the security and buyer protection for debit cards is much lower than for credit cards.
Prepaid cards
One of the newest alternatives to credit cards are prepaid cards. Prepaid cards work like a credit card, with all the security features and spending capabilities. However, they also have the features of a debit card in that you do not borrow money, and only spend what you can afford. You prepay money on to the card, which you can top up much like you do for mobile phone credit. You can then use the money on the card for credit purchases.
These types of cards are especially useful for teenagers and young adults, who need some form of card but who also have to control their spending. Parents can monitor and control a child's spending by only putting a certain amount each month onto the card.
Although prepaid cards cannot offer the credit you need to buy expensive items, they do offer protection and security as well as stopping you from getting into debt. If you are having problems with your credit card spending, then getting a debit or prepaid card could be a good option for you.
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