10 Alternative Options In Case You Can’t Get a Credit Card

While having a credit card may come with various benefits for its holder, many people struggle to obtain the desired card for multiple reasons. Bad credit scores due to payment issues in the past and avoiding unfavorable interest rates are just some of the reasons why borrowers look for alternative financing methods.

Still, not all of these methods may be suitable for your needs. So, read on to learn what options are available and how those could benefit you. 

Available Credit Card Substitutes

These are some of the most common alternatives:

Prepaid Debit Card

A prepaid debit card is a payment card whose owners add funds in advance and can use them until the balance is depleted. These cards offer several advantages over credit cards. 

First and foremost, prepaid debit cards often come with lower fees than credit cards, and no debt is associated with them since you can only spend the money already in your bank accounts. Moreover, no credit check is required to obtain a prepaid debit card, which makes it an ideal option for people with bad credit scores.

Many debit and credit card issuers oblige their clients and increase the limit when asked. Note that these increases could be temporary (maybe a single day only) or permanent. 

Personal Loan

Personal loans can be a great option if you need to borrow a large sum of money for a substantial expense such as home improvement. Interest rates on personal loans are usually lower than those on credit cards, and you'll have a fixed repayment schedule. Remember that the amount you can obtain depends on various factors.

If you’re considering this alternative, you might wish to learn how to apply for a personal loan. Also, think about checking out how to get a lower-interest loan as well.

Arranged Overdraft

Hopefully, you are in good standing with your bank, so you might be eligible for an arranged overdraft. This is another alternative as an extension of your bank account. It's the money you can withdraw up to a specified limit once your balance becomes negative.

Remember that an overdraft can sometimes come with high interest rates, but some banks approve this type of loan interest-free within an agreed term or up to a certain amount.

Secured Credit Cards

A secured credit card may be a good option if you're having trouble getting a regular credit card because of bad credit. With a secured card, your credit limit is based on the collateral which a credit card issuer can use in case you default on the loan. Some collaterals a credit card company will typically accept are homes and cars.

So, it’s advisable to be punctual with your payments since credit card debt can cost you a lot otherwise. If you are unwilling to put up collateral, consider checking out how to get an unsecured credit card. 

PayPal

PayPal account owners enjoy similar benefits credit cards offer when purchasing online. Moreover, this platform provides robust protection against fraud and has a phone number for reporting the fraudulent practices users have detected. 

Plus, PayPal cards work pretty much like debit cards, and you can earn 1% cash back on all purchases.

Your PayPal account can connect to your bank account and deduct the amount instantly. PayPal also offers a 'one-click' payment option, which makes checking out faster.

Short-Term Loan

Have you ever found yourself in a situation where you can't afford to pay your bills because of an unforeseen expense? If so, consider taking a short-term loan.

This kind of loan can help cover a one-off expense, such as car repair. However, it's essential to be aware that taking out multiple short-term loans can quickly become unmanageable, as many of them come with high interest rates.

Electronic Wallets

Electronic wallets are intended for clients who have encountered difficulty getting their desired card. Ewallets can be used for retail transactions as well as sending and receiving money from friends and family. 

The best-known electronic wallets are Google Wallet and Apple Pay. They are practical since you don't need to carry any physical cards. But before using this particular alternative, be sure to check what transaction fees apply.

Gift Cards

Many retailers offer gift cards you can use at all of their branches, some of these even featuring a major credit card company's logo. Additionally, there are gift cards that can be preloaded with funds and act like debit cards.

Gift cards are popular among people who are reluctant to use their other cards for any reason. Many users resort to gift cards to avoid breaching their credit limits and thus maintain good credit history.

Guarantor Loans

A guarantor loan relies on the good credit rating of a family member or a friend who acts as your guarantor. It’s an excellent option if you haven't had time to build up a good credit score or have bad credit, irrespective of the reason.

With this type of loan, someone else will be responsible for repaying the loan on your behalf if it turns out you aren’t able do so. However, approach this option with caution and commit to it solely if you're sure you can pay off the loan in a timely manner. Otherwise, it could strain the relationship between you and your guarantor.

Peer-to-Peer Lending

Peer-to-peer lending comes down to taking a loan from an individual rather than a financial institution. Often more advantageous for the borrower, this type of arrangement may offer better rates than a bank.

On the flip side, the benefit for the lender is the possibility to earn more this way than placing their funds in a bank savings account. Regardless, there's a risk involved for the lender since the borrower might default on the loan, and getting the money back could prove tricky.