Convenient Alternatives to Credit Cards

Living without credit cards can be easier than you’d think. There are plenty of alternatives to credit cards for everyday purchases, regardless of your credit score.

When you’re focused on paying down debt, it’s often necessary to stop using credit cards and avoid taking on new debt while you chip away at your balances. In fact, most unsecured debt in the United States is credit card debt. But as society moves further away from cash and an increasing number of everyday purchases are made online, credit cards seem to have become indispensable.

If you’re not using credit cards, how can you make purchases, unless it’s an in-person transaction? That’s where credit card alternatives come in.

What are credit card alternatives?

Credit cards offer a convenient way to borrow small amounts of money and make purchases quickly—especially online—but you can use other financial tools to make purchases without actual cash.

Looking for credit card alternatives? From debit cards to Buy Now, Pay Later services, there are many convenient options to help you avoid credit card debt while still managing your payments, both online and in-store.

You don’t necessarily need a credit card to buy things online. Here are a few of the most popular alternative options.

Credit card alternatives: Summary

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Debit card

Debit cards are one of the best alternatives to credit cards. A debit card looks like a credit card but lets you spend money from your checking account. If you’re used to the flexibility of credit cards (i.e., the option to pay off the purchase in the future), you may have to be more disciplined about staying within your budget. To avoid running out of money in your account when using a debit card, keep track of how much you can spend and be sure to figure in how much needs to stay in the account to pay bills.

You might want to open a separate checking account and use a debit card tied to that account for daily spending. That way, you know the balance on your spending account is what you have to spend, and you can be more confident that you won’t accidentally spend money you need for things like your rent and utilities. In fact, that strategy could help you establish a better understanding of your budget and become more disciplined with it. Look for checking accounts with low or no monthly fees.

Reloadable prepaid cards

Similar to debit cards, reloadable prepaid cards may be used wherever credit cards are accepted, but they don’t expose you to the risk of taking on debt. You can find 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 if you use ATMs, as well as fees to reload the cards with more funds. For example, you pay $2.50 per transaction (along with any applicable ATM operator fees) to use the Bluebird Prepaid Debit Card at ATMs that are not affiliated with the MoneyPASS network.

You may want to do a little research to find the ones with the best terms and lowest fees. For example, some prepaid cards are protected from loss and theft under certain conditions, while others are not. All of these cards have some type of fee, but some are more affordable than others. 

Prepaid cards aren’t reported to the credit bureaus and 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

You’ll often see BNPL services like Afterpay and Klarna appear as options during the checkout process online. These are essentially short-term loans that split your payment up into a few chunks that you repay every two weeks. Many BNPL loans are interest-free. You usually have to link up your bank account for automatic payments. If you pay late, you may be charged fees. 

BNPL loans can be a good credit card alternative online, but could stress your budget. It’s still a debt, even if you aren’t charged interest, and using BNPL loans too frequently can stress your budget.

Secured credit cards

A secured credit card is similar to a prepaid credit card, and one of the best alternatives to credit cards if you’re trying to rebuild your credit. You deposit money into an account, and that money is held as a collateral. Then you use the card just like any other credit card. If you make purchases, you will need to pay the bill when it comes. If you pay less than the full balance, you could pay interest charges. If you fail to pay as agreed, the credit card issuer can keep your deposit. To reduce their risk of loss, your credit limit is often equal to the amount of your deposit. 

Many secured credit cards are available to people with bad credit.

Unlike prepaid credit cards, most secured credit cards do report to the credit bureaus. Consistent on-time payments could have a positive impact on your credit profile. For this reason, secured credit cards can be a great option if you have a low credit score and you want to work on improving it.

Mobile payment options (Apple Pay, Google Pay)

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 and Apple Pay both support Buy Now, Pay Later loans for purchases that you make through their services. 

Peer-to-peer lending

Peer-to-peer (P2P) loans work by connecting borrowers with everyday people who want to help fund loans (for the lenders, it’s an investment that they hope will be profitable). P2P loans collect funds from a pool of people willing to lend money and pass it along to the borrowers, helping them manage their repayments along the way. 

Traditionally, P2P loans were available to people with bad credit who didn’t qualify for other loans. That made them a good alternative to credit cards for loans. 

In recent years, P2P loans have become scarcer as most well-known lenders have stopped offering this service. As of late 2024, Prosper and Kiva still offer P2P loans. The other P2P lenders are largely offering personal loans and business loans.

Cryptocurrency

Bitcoin is the most well-known cryptocurrency, but there are many others. 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, for example, but without having to apply and get approved by a bank first. 

This makes it easier for many people to access alternative financial services, but you need to be careful, too. Cryptocurrency is unregulated and uninsured. Not having any government regulations can be good for ease of access, for example, but it means you don’t have protection in case of scams or other dangers.