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8 Credit Card Alternatives: How to Choose

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated February 13, 2024​

7 min. read​

You’ve had a series of financial missteps in the past, and your credit health took a hit. Now, you’re having trouble getting approved for a traditional credit card, and a secured card isn’t viable since you don’t have the funds on hand to make the security deposit.

The reality is credit cards can be a great financial tool, but they are not the only option available. You could get a personal loan, secured loan or short-term loan. A peer-to-peer lender or guarantor loan is also an option. Or you can inquire about arranged overdrafts or payday loans as a last resort.

So, regardless of your financial situation, there are several credit card alternatives that could be a better option to access the funds you need.

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What Factors Determine Credit Card Approvals?

Credit card issuers consider these factors when you apply:

Credit Score

You’ll also need to meet the minimum credit score requirement, as this three-digit number plays a vital role in determining your credit card approval. Credit card issuers use credit scores to evaluate your creditworthiness and assess the risk involved in providing you with a credit line.

Credit scores are primarily calculated by the three major credit bureaus – Experian, Equifax, and TransUnion. They take into account various factors such as your payment history, credit utilization, credit mix and the length of your credit history.

A bad credit score can significantly affect your chances of getting approved for a credit card. With a low credit score, issuers may see you as a high-risk borrower, which can lead to your credit card application being rejected. Or if you’re approved, you could get a higher interest rate or lower credit limit.

That said, improving your credit score may increase your approval odds. Be sure to avoid late payments by paying your bills on time, keep your credit utilization low and monitor your credit report for inaccuracies or discrepancies that could negatively affect your score.

Debt-to-income Ratio

The sum of your minimum monthly debt payments compared to your gross monthly income, or your debt-to-income (DTI) ratio, should also be reasonable in the eyes of the credit card issuer. To illustrate, if your monthly income is $6,000 and your total monthly debt payments amount to $2,050, your DTI would be 34 percent.

A lower DTI is usually more favorable to credit card issuers, as it typically demonstrates that you are more likely to manage your credit responsibly and make timely payments in the future. On the other hand, a high DTI may raise concerns that you are overextending yourself, making it difficult for you to stay on top of your current debt load.

Keep in mind that creditors often have varying DTI thresholds. Some prefer applicants with a DTI below 30 percent, while others may accept higher DTI ratios. This means it’s essential for you to maintain a healthy DTI when looking to improve your chances of getting approved for a credit card.

You can lower your DTI by paying off your outstanding debts and avoiding new debt. Also, try to increase your income by securing a raise, part-time jobs or another revenue source. Remember that a lower DTI is not the only factor that can affect your credit card approval, but improving it can certainly enhance your overall credit profile.

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Type of Credit

It’s also important to understand that the type of credit card you choose can affect your chances of approval. There are various types of credit cards, and each comes with its own eligibility guidelines.

As the name implies, secured credit cards require a deposit, which typically serves as your credit limit. The deposit reduces the risk for the issuer, and the likelihood of getting approved for a card is much higher. As you use the card responsibly and make on-time payments, your credit score will likely improve, paving the way for an unsecured credit card approval in the future.

Cash back credit cards offer a percentage of cash back on all purchases made with the card. Approvals for these cards generally require a good credit score or excellent credit score. Lenders look at your credit history and financial standing to determine if you can responsibly handle a rewards-based credit card.

To increase your odds of getting approved for the credit card of your choice, focus on improving your credit score. As suggested above, monitor your credit profile regularly to confirm the accuracy of the contents. If you spot inaccuracies or errors that can damage your score, address them by filing disputes promptly.


Income plays a significant role in credit card approvals. Lenders want assurance that you can repay the credit card debt you take on in a timely manner.

A higher income typically results in better chances of approval, while a lower income may limit your options. So, ensure that your financial information is accurate when applying for a card. It can be tempting to overstate your earnings to get a higher credit limit. However, lying or exaggerating your income can result in a rejection or even legal consequences.

Credit History

Older credit accounts with a solid payment history indicate financial responsibility. Lenders will look favorably upon applicants with a history of responsible credit usage.

To improve your credit history, keep older accounts active and avoid opening several new accounts within a short period. Doing so prevents you from reducing your average credit age and receiving excessive dings to your credit report each time you apply for credit.

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Your Age and Citizenship Status

Applicants should be at least 18 years of age and be U.S. citizens or permanent residents with a valid Social Security number. Some credit card issuers also accept Individual Taxpayer Identification Numbers (ITINs).

8 Credit Card Alternatives

Below, you’ll find an overview of the most popular alternatives to credit cards that could work for your personal finances.

1. Personal Loans

Personal loans are unsecured debt products that are dispersed in a lump sum. In most instances, the interest rate is fixed, and you’ll make equal monthly installment payments over a set period until the loan is paid in full. You’ll likely get a higher interest rate if your credit score is low, but your overall borrowing costs may still be lower than you’d incur with a credit card.

2. Secured Loans

A secured loan is a type of personal loan that requires collateral. They’re easier to get approved for and often come with lower interest rates since they’re not as risky for lenders. However, you should proceed with caution and only use this option if you’re confident you can make timely monthly payments. Otherwise, you risk losing your assets if you default on the loan.

3. Short-term Loans

Short-term loans come in small amounts and are often payable within a few months. You may find it useful if you need to cover a one-time expense, like a flat tire, or pay a few bills before your next paycheck. Many lenders offer these products even if you don’t have perfect credit, and borrowing costs aren’t too high since they don’t give you a ton of time to repay the loan.

4. Peer-to-peer Lending

Another credit card alternative worth considering is a peer-to-peer loan. They’re offered by individuals who are looking to earn more on their money than they’d get with a traditional savings account that pays a measly return. You can find these loans through matching services that identify people who may be willing to lend to you based on their lending criteria.

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5. Guarantor Loans

If your credit score is too low to qualify for other credit card alternatives or if you don’t have a credit score, consider a guarantor loan. You’ll apply with a friend or relative who will also act as your guarantor. Be mindful that if you default on the loan payments, they become responsible for the outstanding balance.

6. Arranged Overdrafts

Some financial institutions offer arranged overdraft protection on your checking account. This feature lets you overdraw your bank account up to a certain amount and bring it current by a certain time frame without incurring penalties. You’ll likely be assessed interest in using this service, though, so inquire about the costs before signing up.

7. Payday or Title Loans

Payday and title loans should only be used as a last resort once you’ve exhausted all other options. Payday loans of up to $500 are available in most states with no credit check, but they come with exorbitant interest rates and are typically due on your next payday. Some lenders also offer payday loans as an expensive line of credit that’s accessible on an as-needed basis. Title loans are secured and costly and put you at risk of losing your collateral if you fall behind on the loan payments.

8. Credit-building Card

Unlike a traditional credit card, you don’t need to have good credit in order to use it. Instead, the cardholder must first load money onto the card before making any purchase. This makes it ideal for those who have a poor credit history or do not want to get a traditional credit card.

Some providers even offer other benefits, including no annual fees, no minimum security deposit, and flexible spending limits. Some even have the ability to manage and track your spending via an app, earn rewards, and credit-building features.

Current offers a secured credit card called the Current Build Card, where the funds are tied to your secured account to make sure you can only spend the money you have. Current then reports these positive payments to the credit bureaus, helping you improve and build your credit score. Plus, their mobile app offers features like the Current Spend Account, with budgeting tools to help you manage your finances even more, savings pods that earn up to a 4.00% bonus, and an opportunity for you to invest in crypto. Visit the Current’s website to learn more and start with your free account.

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How to Choose Between Credit Card Alternatives

When evaluating credit card alternatives, keep these factors in mind.

Eligibility Requirements

Is there a minimum credit score requirement? Does the lender prefer a certain debt-to-income ratio?

Costs and Other Fees

What fees does the lender or creditor assess? How do they compare to other alternatives you could be eligible for? For example, are there loan origination fees? Will you be on the hook for early repayment penalties if you’re able to repay what you owe before the repayment period ends?

APR and Interest Rate

How much does the lender charge in interest? What is the annual percentage rate (APR) or the total borrowing costs, including interest and fees?

Fund Availability and Limit

Do the lender’s borrowing limits meet your needs? How soon will you receive funding once your loan application is approved? Is same-day funding available, or will you have to wait several business days to access the funds?


What are the repayment terms? Are they long enough to give you an affordable monthly payment? Do you have the option to select a repayment term that works for your finances?

Safety and Security

How does the lender protect your personal and financial information from fraudsters? What security measures do they have in place to prevent your data from being compromised?

Other Perks and Benefits

Are there other incentives that make one option a better fit over another one? Can you manage your account via a mobile app? Does the lender or creditor offer several payment options? Are automatic withdrawals mandatory? Is there a discounted interest rate available if you enroll in auto-pay?

The Bottom Line

Credit cards are not the only option available for accessing credit and managing your finances. There are many credit card alternatives to consider, from secured credit cards to personal loans and peer-to-peer lending platforms.

By understanding your options and choosing the best product for your unique needs, you can take control of your finances and achieve your financial goals. Whether you’re looking to build credit, consolidate debt or simply avoid the high fees and interest rates associated with credit cards, there is a credit card alternative that can work for you.

Take the time to explore your options, compare rates and terms, and make an informed decision that will help you achieve financial success. Ultimately, the best option from this list of credit card alternatives will depend on your individual needs and financial situation.

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