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There are several alternatives to credit cards that also offer some of the benefits. Though having a credit card comes with clear advantages, it is by no means the only way to handle your money conveniently or safely.
Debit Cards
The big difference between credit and debit cards comes in the timing of the payment. With a debit card, money is withdrawn from your checking account when the transaction posts. Credit cards instead draw from a line of revolving credit extended to you by a card issuer. You can make purchases up to your credit card limit regardless of your checking account balance. At the end of the billing cycle, all relevant charges appear on your billing statement and you can pay a portion of the statement or the entire statement with just one payment.
Remember, you are required to make at least the minimum payment by the card due date, but not paying the card in full means you’ll owe interest. While the obvious disadvantage is that you can go into debt, having a credit card allows you to make a single monthly payment and extends the due date out approximately 25 days.
Pro Tip
Debit cards can help you make purchases, but have no bearing on your credit profile, good or bad. If your goal is to build credit, a debit card won’t help you achieve your goal.
Other Alternatives
Personal loans at times make a sensible alternative to credit cards. While personal loans and credit cards are both forms of credit, the two vary in several significant ways. With a personal loan, you receive all your money at once in a lump sum. You then pay off this loan in steady installments over time, with a set end date for your final payment. These payments will include any interest owed.
Thanks to lower interest rates, personal loans are useful for making large, one-time purchases or consolidating high-interest debt. For smaller and more frequent purchases—especially when you’re new to credit—a credit card remains the better choice provided you can .
Forbes Advisor Credit Card Rewards Experts Becky Pokora and Dylan Pearl contributed to this article.
Find The Best Credit Cards For 2024
No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
The Secured Chime Credit Builder Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A., pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your card for its issuing bank.
¹Out-of-network ATM withdrawal and OTC advance fees may apply. View The Bancorp agreement or Stride agreement for details; see back of card for issuer.
²To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime® Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.