Putting everything on your credit card? There are other ways to pay
Don’t believe you have to have a credit card. Paying interest sucks and there are other ways to pay. It sucks the lifeblood out of your finances. That’s because unless you clear your entire bill within the interest free days, you pay interest.
That interest means you’re paying as much as 20% more than your mates for the same things, which may have a detrimental effect on your finances over time.
Other (sometimes better) ways to pay
Thankfully there are way more credit-free ways to pay than ever before that are far better for your bank balance. Here are some of the options.
Debit card. One of the arguments for needing a credit card is the ability to shop online. All banks now offer either Mastercard or Visa debit cards. They look like credit cards and can be used anywhere that displays the Mastercard or Visa logo, but you can only spend your own money, not credit.
POLi and BPAY. Both POLi and BPAY are payment methods that take the money direct from your bank account. Your payment is approved immediately. You can use POLi to pay online at Microsoft, Facebook, MightyApe, Virgin Australia and other etailers. BPAY is typically used to pay bills. Banks aren’t keen on third-party payment systems, and have in the past warned about the potential for fraud.
Pay later. It’s called the modern form of laybuy. Afterpay, zipMoney, Openpay and others allow you to buy now, receive the item, and make interest-free payments over several weeks. The problem is if you miss a payment the charges can prove more expensive than interest. Non-payment may also put a black mark on your credit record.
EFTPOS. EFTPOS is another credit-free way to pay in Australia. EFTPOS has announced that it is looking at ways for Australians to pay online using their EFTPOS cards.
Pre-paid travel cards. Pre-paid currency cards such as Travelex Cash Passport, NAB Traveller Card and Global Wallet work like debit cards when you’re travelling overseas. The catch is that you pay fees and commissions that make this an expensive way to spend.
PayPal. This online payment method that you can load up and spend can be used for eBay payments and at retailers such as Woolworths, Country Road, Jetstar and others. Stripe is another similar offering that is now available in Australia.
Bitcoin. You can pay for a growing number of real life purchases using your Bitcoin wallet. I do own a very small amount of Bitcoin and look forward to the day when I can spend it and bypass my bank’s fees. In Australia CoinJar is growing in popularity as a Bitcoin wallet. Just remember that Bitcoin is very new and anything could happen.
Cash. What’s that, you say? Sometimes ditching the plastic and spending cash is the most sensible option. Withdraw cash at the beginning of the week, split the money between envelopes for different purposes such as shopping and entertainment and once each envelope is empty just stop spending.
There are other forms of payment coming on. For example Apple Pay has made it to Australia and is available in stores such as Woolworths. It’s possible to use Alipay for some purchases and there are stores that accept WeChat red envelopes in parts of Australia. However payments from these are usually connected to your debit or credit card so aren’t in effect changing the way you spend.
Of course credit cards do have uses when you have an emergency. But everyday things such as buying groceries or school uniforms aren’t emergencies. They need planning for.