Credit Card Alternatives

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Everyone seems to desire the lowest rate with a credit card, but easy credit by definition comes with a price attached. Anyone who shops for a card will see interest that is above ten percent and closer to twenty percent. If a card charges less than ten percent interest, then it is an extraordinary bargain. Most people end up paying a great deal of money to swipe plastic, so the very least is to know the options to begin with.

The best way to save money is simply not to use a credit card at all. People used to save for their desires. It is too easy to avoid making large payments, and the final price tag for a printer or nice dress can be a quarter more. The flip side is that medium-sized purchases are unavoidable. Sometimes a new dress is worth the occasion, and someone furnishing an office for a business might see these purchases as an investment.

If some form of credit must be used, consider other options before resorting to a credit card. These are best used for unexpected expenses, and someone who can freely spend money can just as easily use a debit card attached to a bank account. Alternatives include personal loans, lines of credit, and loans attached to collateral.

A line of credit is treated the same as a credit card. The difference is that the card is attached to a bank rather than a short-term lender. Lines of credit are offered to customers of a bank who have an account with the bank, and so the bank has lower risk because paychecks are deposited with the bank. Interest for these cards tends to be lower, but there are usually no perks.

A personal loan is a lump sum that can be applied to a bunch of expenses at the same time. These are best used when tackling a large project such as furnishing a living room or building a patio. Someone can just as easily create a list of desired purchases and obtain a single loan to make all these purchases at the same time. Secured personal loans offer lower rates but require you to put up an asset such as a car or a house as collateral.

Credit cards have never been known for having low interest rates, but there are ways to shave away a few percentage points. Having an excellent credit score to begin with helps. Someone with a poor credit score can use a credit card as a tool for building credit. Having existing cards also helps to build credit because not misusing them is evidence of credit worthiness.

Consumers have the greatest control over their perks. Some cards offer discounts on gas while others offer benefits at the grocery store. The reality is that lenders use these benefits to encourage spending. Many consumers neglect prompt payment, and so they pay more in the long run. Cards with a lot of perks might have a higher interest rate. As a general rule, forgo the benefits and obtain a better interest rate. Make payments promptly, although a card payment may not be as important as a rent payment.

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