Convenient Alternatives to Credit Cards
UpdatedApr 17, 2025
- Credit card alternatives can help you avoid interest payments and debt.
- Debit cards and secured credit cards provide an experience similar to credit cards.
- Payment apps let you pay online without a credit card.
Table of Contents
Living without credit cards can be easier than you’d think. There are at least half a dozen alternatives to credit cards for everyday purchases, regardless of your credit score.
Sure, there are times to avoid credit. When you’re focused on paying down debt, you might avoid using credit cards and taking on new debt while you chip away at your balances.
But as society moves further away from cash and people purchase more online, credit cards seem to have become indispensable. Especially since they come with security guarantees like fraud protection, and often reward you for spending. Finding solid alternatives can be tricky.
If you’re not using cash or credit cards, how can you make purchases? You need to pay somehow—and that’s where credit card alternatives come in.
What are credit card alternatives?
Credit card alternatives are financial tools that let you make purchases without cash or traditional credit cards. Debit cards, Buy Now, Pay Later services, and other options can steer you away from credit card debt while facilitating payments, online and in-store.
You can easily shop online without a credit card. Here are a few popular alternatives.
Credit card alternatives: Summary
Alternative | Type of Payment System | Does it offer Credit/Loan? |
---|---|---|
Debit Cards | Direct payments linked to checking | No |
Reloadable Prepaid Cards | Prepaid card with upfront balance | No |
Buy Now, Pay Later (BNPL) Services | Installment payment for purchases | Yes |
Secured Credit Cards | Credit card with security deposit | Yes |
Mobile Payment Options (Apple Pay, Google Pay) | Digital wallet linked to debit/prepaid | No |
Peer-to-Peer Lending | Online lending platform | Yes |
Cryptocurrency | Digital currency for online payments | No |
Debit card
A debit card is one of the best alternatives to credit cards. A debit card looks like a credit card, but lets you spend money from your linked checking account. Debit cards are less flexible than credit cards, since the money must be there already. To avoid overdrafting and causing a negative bank account balance, keep close track of your spending. A budget can help.
Consider opening a second checking account for all your debit card use. You can be more confident that you won’t accidentally spend money you need for essentials like rent and utilities. This strategy could help you establish a better understanding of your budget, and become more disciplined with it.
Debit card pros and cons:
Money comes directly from your checking account
Low debt risk
Less flexible than credit card
Not reported to the credit bureaus
Open checking accounts with low or no monthly fees to keep your debit card use inexpensive.
Reloadable prepaid cards
Reloadable prepaid cards are credit card alternatives that can be used wherever credit cards are accepted. These don’t expose you to the debt risk of a credit card. You can load them with funds offline or online, with cash at the register, or with money in your checking account.
Search for prepaid cards wherever gift cards are sold (such as grocery stores and pharmacies), or buy these credit card alternatives online from issuers like Visa, Mastercard, and American Express.
You may have to pay transaction fees when you swipe at ATMs, as well as fees to reload the cards with more funds. For example, the Bluebird Prepaid Debit Card doesn’t charge a fee to withdraw money at MoneyPASS ATMs but you’ll pay $2.50 per transaction (along with any applicable ATM operator fees) to use it at other ATMs.
Research helps you find a prepaid card with the best terms and lowest fees. For example, some prepaid cards are protected from loss and theft under certain conditions, while others aren't.
Reloadable prepaid card pros and cons:
You can only spend with a preloaded card
Zero debt risk when swiping
Much less flexible than credit card
Not reported to the credit bureaus
Prepaid cards won’t help or hurt your credit. In fact, you don’t even have to identify yourself when you buy one.
Buy Now, Pay Later (BNPL) services
BNPL services like Afterpay and Klarna are short-term loans that split your purchase into chunks that you pay every two weeks. Many BNPL loans are interest-free. You usually link up your bank account to make payments automatically. If you pay late, you may be charged fees.
BNPL services are good credit card alternatives for online purchases, but can stress your budget. Even though a BNPL service charges you zero interest on timely payments, it’s still debt. You want to be in a strong position financially when the bill comes due—or about four bills, in this case.
BNPL pros and cons:
Split payments into four or more installments
Extremely flexible, with a predictable and automatic payment plan
Late/missed payments incur heavy interest charges and fees
Secured credit cards
A secured credit card is a credit card that requires a security deposit as collateral. Collateral is something of value that the lender can keep if you fail to repay the debt. It’s not prepayment for your transactions.
The credit limit is often equal to the amount of your deposit. If you want a higher credit limit, you can make a bigger deposit. You use the card just like any other credit card. You’ll get a monthly statement. If you have a balance, you can choose to make just the minimum payment, or you could pay more. If you don’t pay off the card each month, you’ll pay interest on the amount you owe.
If you fail to pay as agreed, the credit card issuer can keep your deposit.
Most secured credit cards report to the credit bureaus. Keeping your balance low and making consistent, on-time payments could boost your credit profile. For this reason, secured credit cards are often great credit card alternatives for improving your credit score.
Secured credit card pros and cons:
Can spend as flexibly with a secured card as with an unsecured card
Potential to help you build credit
Must put down initial deposit to spend
You can find many secured credit card options, no matter your credit score range.
Mobile payment options (Apple Pay, Google Pay, PayPal)
Apple and Google both offer mobile apps to make purchases using a digital wallet and a linked debit card, prepaid card, or checking account. These digital wallet alternatives to credit cards store your account details so you don’t have to type them in each time you make a purchase.
Google Pay, Apple Pay, and PayPal can link directly to your bank account. They also support Buy Now, Pay Later loans.
Mobile payment options pros and cons:
Choose your payment option at checkout
Prefilled payment details
Requires linked account(s)
Peer-to-peer lending
Peer-to-peer (P2P) loans work by connecting borrowers with everyday people who want to lend money to earn a profit. P2P loans collect money from pools of people willing to lend, and pass it along to the borrowers. The P2P lender collects the monthly payments and distributes the money to the investors who funded the loan.
Traditionally, P2P loans were available to people with bad credit who didn’t qualify for other loans. That sometimes made them an excellent alternative to credit cards.
In recent years, P2P loans have become scarcer, because most big lenders have stopped offering this service. As of early 2025, Prosper and Kiva still offer P2P loans. Other P2P lenders have largely switched to personal loans and business loans.
Peer-to-peer lending pros and cons:
Might qualify with a lower credit score
Few options available
Cryptocurrency
Cryptocurrencies like Bitcoin can be used as alternatives to credit cards. These digital assets can be traded back and forth just like regular money. You can open a digital wallet and store cryptocurrency as you would in a bank account.
Crypto is easy to access, but it’s unregulated and uninsured by the federal government. That means there’s little to no protection from scams. If your account is compromised or you fall victim to a scam, you might have to fend for yourself.
Cryptocurrency pros and cons:
Easy to open a wallet and get started
Lots of scams and little protection
Perks of using credit card alternatives
Better budgeting and spending habits are perks of credit card alternatives.
Budgeting: Debit cards and prepaid cards automatically cap spending, denying attempts to spend more than your balance. That makes it difficult to go into debt. You can avoid stressing about the late payment and interest charges credit card users must track.
Banks charge you overdraft fees when you spend more than you have in your account. Debit cards disable overdrafts on one-time purchases by default, but there are still instances in which your bank may charge you for attempting to spend above your balance.
Spending habits: Debit cards, prepaid cards, and secured credit cards make it easier to create good spending habits. All three card types cap your spending at levels you can probably cover. Secured cards even reward you for good spending habits because using them can boost your credit score.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during November 2024. This data highlights the wide range of individuals turning to debt relief.
Credit card balances by age group for those seeking debt relief
How do credit card balances vary across different age groups? In November 2024, people seeking debt relief showed the following trends in their open credit card tradelines and average credit card balances:
Ages 18-25: Average balance of $9,117 with a monthly payment of $282
Ages 26-35: Average balance of $12,438 with a monthly payment of $390
Ages 36-50: Average balance of $15,436 with a monthly payment of $431
Ages 51-65: Average balance of $16,159 with a monthly payment of $529
Ages 65+: Average balance of $16,546 with a monthly payment of $499
These figures show that credit card debt can affect anyone, regardless of age. Managing credit card debt can be challenging, whether you're just starting out or nearing retirement.
Credit card debt - average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average credit card debt for those with a balance was $6,021. The percentage of families with credit card debt was 45%. (Note: It used 2022 data).
Unsurprisingly, the level of credit card debt among those seeking debt relief was much higher. According to November 2024 data, 88% of the debt relief seekers had a credit card balance. The average credit card balance was $15,618.
Here's a quick look at the top five states based on average credit card balance.
State | Average credit card balance | Average # of open credit card tradelines | Average credit limit | Average Credit Utilization |
---|---|---|---|---|
District of Columbia | $16,967 | 7 | $24,102 | 121% |
Arkansas | $12,989 | 9 | $28,791 | 83% |
Tennessee | $13,822 | 9 | $27,261 | 82% |
New Mexico | $11,860 | 8 | $25,731 | 82% |
Kentucky | $12,834 | 8 | $26,156 | 81% |
The statistics are based on all debt relief seekers with a credit card balance over $0.
Are you starting to navigate your finances? Or planning for your retirement? These insights can help you make informed choices. They can help you work toward financial stability and security.
Tackle Financial Challenges
Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.
Show source