6 Alternatives to Getting a Credit Card

As a college student, there are many reasons why a credit card may not be in the cards (pun intended). Some students have bad credit history, and some just aren't ready for a big-kid credit card yet. Finding an alternative to a credit card doesn't have to be hard! 

In this article, we'll do a deep dive into several alternatives to a credit card. Whether you need access to funding, cashless payment methods, simple credit-building, or all of the above, there's an option for you. 

Alternatives to getting a credit card

Don't get us wrong; credit cards can be extremely helpful and convenient. However, they also typically require the following:

1. A credit check (which can be scary and possibly lower your credit score)

2. Sufficient financial responsibility (which some students may not be ready for)

3. Typically, a solid credit history (which many students don't yet have) 

Not wanting or being ready for a credit card is no big deal. It can be a solid option for some, but it definitely comes with baggage and responsibilities. 

Don't worry! There are plenty of possible alternatives. 

Debit card

The trusty debit card is a classic payment method that many students utilize. The debit card is linked directly to a checking or savings account, which makes it much more convenient than cash. Here are some top perks of the debit card:

• No Debt — Your payments pull directly from your bank account. If you don't have the funds, then the payment doesn't go through and you may be charged an overdraft fee. It's a bit of a bummer, but it makes avoiding unneeded debt much easier.
• ATM Friendly — Most debit cards allow you to pull cash, as needed, from most ATMs. Make sure you check your provider's policy on ATM fees, reviewing all annual fees and balance transfer requirements!
• Points — Based on your plan, you can rack up points with your financial institution. Points typically result in instant cash back, gift cards, flyer miles, and more. 

One slightly less fun aspect of a debit card is that it doesn't actively report to credit bureaus. This means it won't allow you to build a credit history. So, if you want to raise that credit score, a debit card isn't the best choice. 

Prepaid card

Ever gotten that ideal Starbucks gift card? The prepaid card is a similar concept, except it works almost everywhere. You can continuously load funds on a card and make purchases just like a debit card. 

There's no checking account involved and usually no option for building credit. This makes a prepaid card a good option for short-term usage or if you want to work your way up to a standard debit card. 

Good news! While it's not common, there are other versions of a prepaid card that are easy to use and student-friendly. The KoraCard is an excellent option for students, offering easy access to funds, simple approval, and neat cash-back perks.

Personal loan

Here's where the alternatives to credit cards get more creative. You can take a personal loan out for a variety of reasons, and you gain access to immediate funding deposited into your account. Then you can use the funding and pay it back as agreed, building a good credit history as you go. 

However, it’s important to remember that these loans come with the possibility of poor terms (high interest rates or a low credit limit) and a quick repayment period (usually monthly, with payments depending on the interest rate). And if you miss payments, that can ding your credit score.

If you’re considered a personal loan, take a look at KoraCash as an option. Kora offers up to $3,000 cash with fair rates and flexible terms. It's a funding option designed specifically for students, helping build credit and establish a bright financial future. 

Secured credit card

Don't be fooled by the 'credit card' in the title. Secured credit cards are not like regular credit cards. Rather, you pay a cash deposit upfront to guarantee a credit line. 

These are good funding options for individuals (like students) who have poor credit or even lack a credit history. Here's how that work:

1. Apply for a secured credit card (undergoing a credit check, supplying financial information, etc.)
2. Put down a security deposit (the amount depends on the lending institution and credit line amount)
3. Spend/pay off the card like a regular credit card (building credit history)
4. Receive the deposit back upon closing the account with the line of credit/balance paid

A security deposit may sound odd, but it's pretty straightforward. The lender is taking a risk by offering to fund people with poor credit. So, if the secured credit card balance doesn't get paid, they take the deposit. 

Pay your balance on time, and one day you could graduate to an unsecured credit card!

Third-party payment

You're probably familiar with services like Venmo and PayPal that offer convenience and sassy transaction descriptions. They're used by students everywhere, and now you can even use these services to make specific online purchases. 

Don't want to open a credit or debit card? Try using a third-party payment service.

Note that these services aren't available everywhere, and you may still need a bank account. However, when you're just looking to pay your roommate for utilities 💧 or last night's Uber 🚗, these services are perfect. 

Authorized user

Becoming an authorized user is the ultimate life hack. Basically, a credit card holder (typically a family member with good credit history) will add you as an approved user with their credit card issuer. You get your own credit card and access to their account. 

This credit solution is commonly used by parents and students. It's a solid way to build positive credit without opening your account. 

Keep in mind that you may have to keep track of individual payment history. Plus, it may reflect poorly on your credit if your trusted cardholder lapses on payments. So, be careful about who makes you an authorized user, and you should be just fine!  

How to pick the best alternative to a credit card

There are plenty of options and it's easy to get overwhelmed. We'll help you break it down. Ask yourself the following questions:

• Are you looking to build credit, just pay for transactions, or have easy access to a credit line?
• Do you have a good credit history and solid eligibility?  
• Are you fiscally responsible enough for payments? (No judgments, good habits take time!) 

Based on your actual financial need and qualifications, you should be able to rule out some alternatives. Remember that the best credit card alternative is designed to fill your needs and help you succeed. 

No credit card? Kora has options

From third-party payments to debit cards, there are many viable alternatives to credit cards. Here at Kora Financial, we offer alternatives built to help college students reach financial success.  

KoraCash is an excellent option for a personal loan for students whether they need to make bigger or smaller purchases. It's up to you! 

KoraCard is a prepaid card option for those not looking to build credit and who want to make easy transactions. We include added perks like no annual fees or overdraft fees. 

All of the Kora offerings are easy to apply for and navigate. Check us out today!