With an economy in turmoil, a large percentage of people are no longer qualifying for traditional credit cards. Even those who can qualify are trying to stay away from more traditional credit cards to reduce their personal expenses and debts. Rather than throw your hands up in the air and say there’s nothing you can do, here’s a look at a few alternatives to credit cards that may help you get back on your feet financially.
Credit Union Credit Cards
Studies have shown that credit cards issued through credit unions are far less likely to charge high fees and penalties often charged by banks. They have lower annual fees and longer grace periods to pay your monthly bill than a regular credit card, too.
Not everyone can qualify for a credit union membership or for a credit union issued credit card, but it’s definitely something to consider before signing on the dotted line of a regular credit card.
To find a credit union near you, go to creditunion.coop. The Credit Union National Association can help you find a credit union by calling (800) 358-5710.
Prepaid Credit Cards
On a prepaid card, you deposit the money onto the card and use it until you’ve run out. It’s much like a debit card. There are no interest charges on purchases since you’ve pre-paid for them and you won’t receive any billing statements in the mail.
Prepaid credit cards are not without fees, however. When you first set up the card, you may pay about $10 to open the account. Some prepaid cards charge monthly maintenance fees, transaction fees and then fees each time you put additional money on the card. Most prepaid cards do not report use to the credit reporting agencies, so it’s not even going to help rebuild your credit score.
Prepaid cards are a decent option for someone who needs a card with a Visa or Mastercard logo on it to make a purchase online, by phone, or to rent a car for example – but they’re probably not your best financial option for an all-the-time card.
Secured Credit Cards
To get a secured credit card, you make a deposit to the bank issuing the card – typically between $500 and $1000. Secured cards offer limited credit lines, but they do report your payments to credit reporting agencies which means they will help you re-establish your credit score.