Maybe your credit card company has hiked your rate. Or lowered your credit limit. Or maybe you’ve been through bankruptcy or foreclosure and can’t qualify for a card now. You can still shop safely online using one of these alternatives:
1. Prepaid cards: Mastercard and Visa prepaid cards allow you to load money onto the card and then use it like any other major credit card. (Think "gift card" that you can use anywhere credit cards are accepted.) They require no credit approval and carry the same fraud protection as the regular cards. But fees can be high, so be sure to shop carefully for a prepaid card.
2. Secured credit cards: Secured cards require you to open a bank account and deposit funds in a bank account (security deposit) in case you can’t pay the bills. You’ll get a major credit card you can use anywhere those types of cards are accepted. Shop carefully for a secured card to avoid costly fees.
3. Debit cards: Cards issued under the Visa or Mastercard name can be widely used and carry fraud protection. But if your card number is stolen and used, you'd want to find out immediately. Otherwise, you could bounce checks. One strategy: Have two checking accounts and associate your debit card with the one with the small balance. Just transfer the purchase amount into the account before you buy something with the card.
4. PayPal: It’s easy to set up a PayPal account, and once you do, you can use the PayPal Secure Cards plug in to generate either a one-time or multiple-use MasterCard number you can use on websites that don’t take PayPal. There is no actual MasterCard card associated with the purchase – the money comes out of your PayPal balance or from the bank account you link to PayPal. (Note: PayPal warns that some purchases – like movie tickets and hotel reservations – may require that you show a physical card. Secure Cards is not recommended for these kinds of purchases.)
How are you coping without credit cards these days? Suggestions are welcome!
Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.comTalk Credit Radio. Reach Gerri at creditexperts@credit.com.
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Thanks for the useful info…its all the ways to over-spend !
I thought that prepaid cards often don’t work online, because there’s no way for the site you are buying from to verify that your name & address are associated with the card. Is this really the case?
Is there anyway that don’t even involve cards?
Dalz – Many online stores allow you to pay with Paypal even if you don’t have a debit or credit card. Just look for sites that offer the Paypal option. You’ll have to set up your Paypal account so that the funds come out of your bank account when you make a purchase.
Paypal no longer offers the plug in by the way.
Alex,
We checked with one of the major prepaid card issuers and they confirmed that you should not have a problem shopping online with your prepaid card. With a prepaid card (as opposed to a gift card), your identity typically is verified when you get the card. In the case of a general purpose gift card, you can register the card. Your card can then be used anywhere that brand of card (Visa or Mastercard, for example) can be used.