Credit cards are the most accepted method to buy things without having adequate money in saving the account. There are more than 32.5 million credit card holders in the UK. In February 2018, the credit card debt was £70.8 billion; it means each British household owes £2,604 credit card debt. Credit card spending is climbing up steadily since 1993. November 2017 witnessed the record spending of £17.3 billion. Lending continues to rise; repayments take a plunge. Repayment level didn’t recover; therefore, a gap between loans and compensation remains there. Credit card write-offs increased with until huge spikes until 2010 reaching up to £2.1 billion in June; however, the figure plunged with fluctuations afterwards. The total credit cards pending amount written off was £1.6 billion in 2017.
Nine Disadvantages of Credit Cards:
No one can deny to many benefits of online shopping with credit cards; however, a buyer needs to be careful for not committing the mistakes that only make ‘not using the credit card’ a better habit. Here are nine critical disadvantages of using a credit card for online shopping that encourage using its alternatives:
- The interest rate after the interest-free period is too high. The mounting dues harm the credit score. The user often pays more as interest than the amount for purchases.
- Many users are not aware of credit damage occurring silently. Each credit card purchase is reported to credit bureau agencies; the use of more than 50% credit limit harms the credit score seriously. Each missed payment is also recorded by credit bureau agencies.
- There is a considerable increase in numbers of cases registered against the credit card frauds in the UK. Fraudsters succeed to cheat the people looking to get instant cash in any way. As technology is getting advanced, the numbers of frauds with credit cards users are also increasing.
- Using a credit card to get cash has become a costly affair after the introduction of an advanced cash fee.
- Credit cards companies charge hefty annual fees sometimes as hidden expenses.
- The fees for a missed payment, over the limit usage, balance transfer, overseas transactions etc. come as the financial blow.
- The credit card online shopping needs financial discipline, and most of us lack here. Overspending creates an economic problem for a more extended period.
- Some credit cards issuing agencies promise false for reward points, discount deals, cash-backs etc. The promises stand nowhere if the fees and risks are reviewed.
- The credit card users often make costlier purchases because of having limited sources accepting their credit cards.
Alternatives to Buy Online Without a Credit Card
- Prepaid Cards: These are very similar to a debit card, but the funds are preloaded into the associated account. The prepaid card must be of a significant brand– Visa, Discover, American Express, MasterCard etc. A prepaid card is a great alternative to pay for online shopping. A prepaid card can be had online through a simple application process.
- Gift Cards: Gift card of significant credit card network can be used to pay for online shopping. You can use retailer-specific gift card also for online shopping but typically at particular retailer’s website. Gift cards can be had by visiting the stores in person or by applying online.
- Paypal: It a worldwide service allowing the Paypal account holders to paying all across the countries. The shopping bills are deducted from the checking account. You need to have a Paypal balance. The amount can be loaded from the bank account through any way preferably by digital money transfer. Paypal’s website has the list of retailers accepting payments through Paypal, but options are limited.
- Debit Card: The debit card behaves like the credit card; it can be used for almost any online shopping. It is linked with your bank account and delivers a seamless shopping experience with an added sense of security. Most leading banks give a debit card to the account holder to facilitate even for cash withdrawal.
- Electronic Funds Transfer: Almost all the online leading stores facilitate paying through electronic funds transfer. The buyer has to list the desired items into the shopping cart of the website. The total payment can be made after logging to a personal account on that site. The fees are made directly from the bank account. In case of wrong funds transfer, there is no refund. The best part of this method is that you have more extensive options to make purchases from almost any store.
- Bitcoin: It is a cryptocurrency supported by not all the online stores but by the few indeed. An opening Bitcoin wallet is entirely free. You can buy the Bitcoins from the bank account to pay digitally in cryptocurrency anywhere in the world. Bitcoin wallet allows to you receive the funds also. It is a secure method for making an international payment.
- Prepaid Voucher: The leading brands issue prepaid vouchers under the promotional campaign, or you can buy the prepaid vouchers of a certain amount online with a validity of almost 2 years. These can be used to pay the particular currency. If you want to pay for international purchases, the conversion rate may be applicable. These vouchers are safe for online shopping but have limitations of stores accepting the particular coupons.
- Store Credit Score: Some credit is rewarded for making big purchases; the amount is stored in your personal account allowing using it for the next purchase. Some brands offer this no-cost benefit even for writing the reviews or for being the influencer. You can earn the credit score even for referring the particular product/service/model/brand; the money is transferred to your store wallet once the referral purchase is made.
As technology is evolving fast, the new methods of online payments are also being introduced, but safety is the primary concern of the buyers. Some cards cost less or more, but the risk-free usage makes them favourite among the buyers on the move. Choose the credit card alternative carefully considering the cost, security, acceptance, account management, usage etc.