Alternative Ways To Pay If You Don’t Have a Credit Card
Credit cards are treated as a necessity for purchasing anything, but there are many financial reasons why people may not have them, from struggling with debt to preferring not to use them.
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In fact, a recent Forbes Advisor survey found that 36% of Americans use a credit card as their primary payment method, with more people using debit cards.
What other options does this leave you for payment if you don’t have a credit card? Experts explain that there are actually quite a few.
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Debit Cards
Perhaps the most convenient credit card alternative is simply the debit card.
“Bank-issued debit cards, directly linked to a bank account, enable transactions without relying on credit, providing a convenient alternative to credit cards,” said Sergiy Fitsak, managing director at SoftJourn.
Another option are prepaid debit cards, Fitsak said, which can be loaded with funds in advance, and function similarly to credit cards for online purchases or in-store transactions.
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Buy Now, Pay Later Services
If you’ve ever seen the option to “buy now, pay later,” (BNPL) and wondered if this was a legitimate way to pay, Fitsak assured that it is.
“Companies like Affirm, Klarna, and Afterpay offer installment-based payment plans for purchases without the requirement of a credit card,” he said.
BNPL services split the cost of a purchase into manageable installments, often interest-free, he said. (Though you should be careful to read the terms, because interest may kick in after a long enough period).
“This has become a very popular way to pay when it comes to online merchants,” Fitsak said. “Customers like BNPL because it’s convenient, has zero or low interest rates, has an easy approval process, and only requires a soft credit check.”
Digital Wallets and Mobile Payment Apps
By far the most popular alternative digital payment methods are Paypal, Venmo (which is owned by PayPal), Cash App and Zelle, according to Philip Parker, the founder of CardPaymentOptions.com.
“The latter two are primarily used for person-to-person payments, but PayPal and Venmo are beginning to see more adoption at the point-of-sale,” Parker said.
Additionally, services like Apple Pay, Google Pay, and Samsung Pay utilize smartphones or smartwatches to securely make payments at supported terminals, Fitsak said.
Venmo and Cash App also have the additional benefit of facilitating peer-to-peer payments and can be used for certain online purchases, Fitsak said.
Cash-Back Rewards Debit Card
Another good option is a cash-back or rewards debit card, according to David Kemmerer, CEO of CoinLedger.
“These particular kinds of debit cards operate similarly to rewards credit cards in that you can earn rewards like certain discounts at various businesses, cash back, and more,” he said. “They provide a little more benefit than traditional debit cards.”
Cash
If you are someone who struggles with overspending and really wants to stick to a strict budget, then paying with cash is probably the best option, Kemmerer said.
“You can better restrict how much you are able to spend since you only have a certain amount of money available at your fingertips while shopping,” he said.
He warned not to keep too much money on you in public at any given time, as there is always a chance of getting your wallet stolen or lost, and you won’t be able to recover that cash.
Prepaid Credit Cards /Gift Cards
As fewer establishments accept cash, another option that can be used in almost any retail environment are prepaid credit cards and gift cards, according to Howard Dvorkin, chairman at Debt.com
“The downside to prepaid cards is that they have fees for activating and transferring money on to them,” he said. “Generally speaking, they are good to have available as a backup option if you are intending to use cash for your purchases.”
Secured Credit Card
Another option is a secured credit card, which Dvorkin said might sound like a debit card in that you make a deposit, and you can only charge as much as that deposit.
“But a secured credit card actually builds your credit,” he said. “Of course, you have to make timely payments, but it’s like a set of training wheels for your financial bicycle.”
Cryptocurrencies
Cryptocurrencies are still very new, and not many people have acquired them. However, more retailers are beginning to accept them for payment, even well-known companies. It’s important to do your research before buying any cryptocurrency and speak to a financial advisor.
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