Three Alternatives to Traditional Credit Cards
By Danielle Buffardi

Though most of us are comfortable using the major credit cards we have, there are still some consumers who feel that credit cards can be risky. Be it identity theft, credit card fraud, or high interest rates, not everyone feels credit cards are right for them. That's fine - and it's always good to have options when it comes to your spending. Here we put together three alternatives to traditional credit cards.

Cash - Using good old cash to pay for your purchases can sometimes be the best way to go if you tend to over spend a lot. When paying with cash, you can only purchase what you can afford and the ability to budget your spending comes naturally. If you only have $50 on you then you can only purchase items totaling that amount. Paying with cash also can help you in assessing your spending habits; knowing what you can afford is a major step in stopping any spending beyond your means. Using cash can be an immediate help in controlling your spending and some people need that type of guidance and can handle it well while others feel that paying with cash can be more tedious than using plastic. That's something you have to decide for yourself.

Prepaid debit cards - This is a great option for those who wish to have the flexibility of using a credit card but don't want to overspend. With prepaid credit cards, you make a deposit into the account the credit card draws from; then you can spend only that amount and nothing more as the card will get declined should you attempt to spend more than you have on the card at that given time. It should be noted that prepaid credit cards do not affect your credit score or credit history and will not give rise to or decrease your credit score. Also note that a prepaid credit card will not help to rebuild your credit history since it does not report any major credit bureau. Some prepaid cards charge a small fee for their use and this is something you should look into prior to choosing a prepaid card.

Secured credit cards - these are credit cards in which you make a deposit into the bank that is issuing you the card. Typically these deposit amounts are not of your own choosing, they are sometimes predetermined by the issuing credit card company and can range anywhere between $500-$1000. You're free of charge the amount you deposited and can present the card to businesses like you would a major credit card, you will then receive a statement in the mail and you make the monthly payments like you would on any major card. These types of cards do report your repaying to the major credit card bureaus and thus can help in reestablishing your credit score.
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