Alternatives to Credit Cards: 10 Best Options in 2025
By Maddy Scheckel You’re checking out at your local grocery store, you insert your credit card into the card machine, and it’s declined.
There’s a long line of people behind you.
What are you going to do?
You’ll be glad to know that credit cards aren’t the only way to pay for purchases.
Personally, I’ve been trying to cut down my credit card usage because, like the average American, I struggled with over $5,000 in credit card debt in the earlier stages of my life.
Below, I’ll review the best alternatives to credit cards while answering frequently asked questions and sharing some of my own experiences.
Best Credit Card Alternatives
Credit cards aren’t the only way to pay for everyday items. You have options.
Here’s my list of the top alternatives to credit cards.
1 – Debit Card
The most obvious alternative to a credit card is a debit card.
It provides the same convenience because you can use it almost anywhere.
According to the Nilson Report, over 83% of American adults have a debit card.
Debit cards offer a few benefits that many credit cards don’t.
- Debit cards are an easy way to withdraw cash from ATMs
- Debit cards typically don’t allow you to spend a lot more money than you have, unlike credit cards
- Debit cards basically force you to pay now, so there is no bill coming later. Helpful for folks who aren’t all that organized!
For me, I realized that using a debit card made it easier to stick to a monthly budget. This is because you can’t max out a line of credit or borrow more than you have.
You can only spend the money that’s in your bank account.
See how much you could save by learning how to cancel all subscriptions on your debit card.
2 – Personal Loans
Personal loans are another handy alternative to credit cards.
If you offer collateral like a bank account or property in your loan application, you can often gain access to lower interest rates than credit cards. This even works if you have bad credit.
Collateral assures banks that if you can’t repay the loan, they can still collect something of value.
Quick tip: Shop around when taking out a personal loan. The first bank that’s willing to give you money rarely has the lowest rates. Instead, gather offers from several banks and online lenders. Then choose the one with the best interest and lowest fees.
3 – Buy Now, Pay Later (BNPL)
Buy now, pay later apps such as Klarna, Afterpay, and Affirm are becoming increasingly popular.
They let consumers buy products and pay them off interest-free over a few weeks or months.
But keep in mind that buy now, pay later lenders require a downpayment during checkout, usually around 25% of your checkout total.
This differs from credit cards which allow you to borrow without putting money down first.
Here are the most popular BNPL apps:
- Sezzle (read full Sezzle review here)
- Perpay (read this full PerPay review to learn more)
- Afterpay (read these Afterpay reviews to learn more)
- Affirm (read these Affirm reviews to learn more)
- Zilch (read this full Zilch review to learn more)
- Nelo (read this Nelo review to learn more)
- Klarna (read these Klarna reviews to learn more)
- Zip (read these Zip reviews)
- PayPal Pay in 4 (read these PayPal Pay in 4 reviews to learn more)
- Splitit (read this Splitit review to learn more)
- Apple Pay Later (read this Apple Pay Later review to learn more)
- Sunbit (read this Sunbit review to learn more)
4 – Overdraft
Some banks let customers set up what’s called an “arranged overdraft.” This is an agreement to allow the member to temporarily overdraw on their account up to a predetermined amount.
Although only a short-term solution, an arranged overdraft might be just what you need.
It works like this: Let’s say you have $500 in your account but need to pay an $800 utility bill. You reach out to your bank for an arranged overdraft, and your utility company takes the $800 out of your account. You then pay your bank the extra $300 over the next few weeks or months.
But be aware that this isn’t offered at all banks and many charge high fees for arranged overdrafts. So, be sure to weigh your options first.
5 – Short-Term Loans
Short-term loans are good alternatives to credit cards. They are similar to traditional personal loans, but the primary difference is the timeframe.
As the name suggests, you’ll need to pay back your short-term loan quickly.
This is perfect if you’re getting paid soon but need to settle a few bills in the meantime.
The only significant drawback is that you typically can’t borrow large sums of money since you’re paying the loan back so quickly. It’s only a practical option for smaller expenses.
6 – PayPal
PayPal has become a common form of digital payment. Users can send money, receive payments, and pay for items in-person and online.
This makes it an excellent alternative to credit cards.
In addition, PayPal has their own buy now, pay later option called PayPal Pay in 4. So, customers can spread out payments for goods over several weeks.
PayPal also offers PayPal Credit which is a lending option where users pay installments typically over a few months. The amount borrowed determines the terms and interest.
7 – Prepaid Debit Card
Prepaid debit cards are reloadable cards that allow you to deposit money and use it to pay for products and services in-store or online.
You can load up a prepaid debit card online via electronic transfers or with cash when you purchase the card in person.
I’m a big fan of prepaid debit cards because they keep you financially responsible. For instance, you can only spend the amount available on the card. There’s no borrowing, overdraft, or fees.
So if you’re a person that struggles with spending more than they have, prepaid debit cards could be one of the best alternatives to credit cards for you!
8 – Gift Cards
You probably receive gift cards from friends and family during the holiday season. It’s easy to think of these gift cards as coupons for small purchases.
However, if you save up your gift cards, they can help you pay for even more.
For example, a friend gave me an Uber gift card for my birthday a few years ago. My car broke down three months later, but fortunately, I still had this Uber gift card. I could take my car to the mechanic and use my gift card to travel to work.
Gift cards are an awesome alternative to credit cards because they let consumers selectively save for future purchases.
Have gift cards you don’t want? Learn how to get instant cash for gift cards.
9 – Peer-to-Peer (P2P) Loans
Peer-to-peer (P2P) loans are loans that you receive directly from other consumers. You don’t have to go to a bank or other financial institution.
There are also countless peer-to-peer lending platforms available online. Most of these platforms offer quick pre-qualification, so you can get a feel for the potential interest rates, fees, and repayment terms right away.
Once approved, your loan request is submitted to a platform with interested lenders. If a lender provides good loan terms, you can accept the offer.
Wondering why a stranger would offer to lend you money?
One word: Interest!
They’ll loan you money and earn more on the interest paid over time.
10 – Cash
If all else fails, use cold hard cash.
I find that carrying cash makes it easier to stick to a budget.
Quick story: When I graduated from college, I was determined to pay off my student loan debt. This meant I had to spend less.
At the beginning of every month, I’d withdraw the money that I needed to get through the month, and I spent it on food and other necessities.
I promised myself that if I ran out of cash before the end of the month, I wouldn’t go back to the ATM to withdraw more money.
This made it easy to stick to a budget. So if you find yourself overspending every month, this could be an effective strategy.
Commonly Asked Questions About Alternatives to Credit Cards
Why Can’t I Get A Credit Card?
You won’t be able to qualify for a credit card if you don’t meet the card issuer’s requirements. For example, maybe your credit score is too low, you have too much existing debt, or your income isn’t high enough.
What Qualifies You To Get a Credit Card?
To qualify for a credit card, you should earn a consistent income, have a good credit score, and keep your debt-to-income (DTI) ratio low. If you still can’t qualify, consider finding a co-signer with decent credit history.
What Can I Use Instead of a Credit Card?
Debit cards are excellent alternatives to credit cards because they work almost everywhere. However, if you don’t have cash, you could also take out a personal loan. And if you offer collateral or use a co-signer, you could be eligible for lower interest rates.
How Do I Get Around Without a Credit Card?
Using your debit card is the best way to get around without a credit card. Debit cards typically have lower fees than credit cards, and you can use them at most online and in-person stores.
Why Does Dave Ramsey Say Not to Use Credit Cards?
Dave Ramsey has witnessed people abusing credit cards to the point that it leaves them on the brink of bankruptcy. This is why he recommends that you live below your means, set a monthly budget, and save extra for emergencies, so you don’t have to rely on credit.
Do you get paid twice a month and find yourself struggling to account for that in your budgeting? Learn how to budget biweekly paycheck. And if you need to ramp up your savings fast, learn how to save $3000 in 3 months.
To learn which budgeting app could best help you manage your finances and boost your savings, check out these comparisons of Rocket Money vs the competition:
Then use a net worth tracker to see how your new financial strategies are paying off.
What is a Ghost Credit Card?
Ghost cards are credit cards assigned to specific departments within a business. Typically, anyone within this department can use it, and there are rarely spending limits. This makes reconciling accounts and keeping track of expenses simpler for businesses.
How To Get Rid of $30,000 Credit Card Debt?
A good way to eliminate $30,000 in credit card debt is to use a debt consolidation loan. Search for debt consolidation lenders and find one with lower interest rates than you’re currently paying. This also lets you consolidate your debt into one monthly payment. Check out my list of the best debt consolidation loans.
Is Credit Card a Blessing or a Curse?
Credit cards are a blessing if used correctly because they boost your credit score. Plus, the points allow you to save money on flights, car rentals, and other expenses. However, using them responsibly and paying them off on time is essential. The high-interest can leave you in more debt.
Credit Card Alternatives Online?
Online personal loans, buy now, pay later apps, and peer-to-peer loans are all awesome alternatives to credit cards. You may even be able to save on fees or interest when you switch!
Tomo Credit Card?
Tomo is a credit card that allows users to spend up to $10,000. It is a company focused on helping consumers build their credit, so they don’t even require a credit score to apply!
