Credit Cards

How to Buy Without a Credit Card

EPF Last Update: May 22, 2020

Studies show that nearly 80% of adults own at least one credit card.

And considering access to credit is one of the most controversial issues facing borrowers, the Federal Reserve’s Survey of Household Economics and Decision Making (SHED) helped illustrate that point. The study found that borrowers with incomes of less than $40,000 were less likely to qualify for a credit card. As well, Black and Hispanic borrowers were also less likely to qualify than their White counterparts.

So, if you’re part of the 20% of Americans who don’t own a credit card – either by choice or necessity – we have some tips to help make the most of your financial situation.

Rewards other Ways

A major benefit of credit card ownership is access to cash back and purchase rewards. But, through websites like Ebates.com, you can earn cash back on purchases made from several of your favorite online stores. There are hundreds of options to choose from, with major outlets like Amazon, Walmart and Apple.com all participating.

Moreover, many hotels also offer loyalty rewards to repeat customers. If you book frequently, you can capitalize on great deals without the need for a credit card. Another participant is airline companies. Similar to hotels, you can rack up plenty of frequent flyer miles without having to use a credit card.

Take Precautions when Travelling

When you travel abroad, credit cards are commonly used to verify your identity and ensure you don’t skip out on the bill. However, car rental agencies and foreign hotels are increasingly open to debit card payments. But remember, you need to show two forms of government ID. One can be your driver’s license or passport, while a health card can satisfy as the second option.

As well, make sure you deposit extra money in your account to cover any unexpected charges or purchases. The reason foreign businesses rely so heavily on credit cards is because they act as cover in case you do any damage. Thus, you may have to maintain a ‘cash cushion’ in your debit account to give them peace of mind.

Look into Secured Credit Cards

For certain purchases, only a credit card will do.

So if you don’t qualify for traditional plastic, opt for a secured credit card instead.

Because you have to deposit funds as collateral, secured credit cards behave similarly to debit cards. When your security deposit equals your credit limit, the product is pretty identical. However, some issuers allow you to deposit less than your credit limit, which enables some borrowing.

Keep in mind though, because secured credit cards are designed for borrowers with bad credit, APRs are usually much higher than traditional credit cards. As well, you still need to make monthly payments. Issuers do not deduct these from your collateral balance.

Stay on The Top of Your Credit Report

If you decide the credit card lifestyle is not for you, you still need to stay on top of our credit report. Just because you’re not accessing credit products doesn’t mean your credit score isn’t being affected. If you plan on purchasing a home sometime in the future, maintaining a healthy credit score is a must.

Another Issue is Identity Theft

When you shop with a debit card or pay with a check, your personal information is still floating around in the public space. Thus, hackers can do damage when that information falls in the wrong hands. If you don’t monitor your credit report, you won’t notice when new accounts or charges are being made in your name.

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