By Allison Tait
MSN NZ Money writer
It's a brave person who tries to do without a credit card these days. You need one for everything from checking into a hotel room to shopping online. But with the card comes the temptation, and with the temptation comes high interest rates — and charges that add up faster than you can say "On credit thanks".
Fortunately, there are alternatives: the debit card and the Prezzy Card. Both use your own cash, but in different ways.
Do you use your credit cards too much? Or how do you get by without a credit card? Have your say below.
Debit cards
In her book
Savvy girls guide to Money (Pier 9), Emily Chantiri describes debit cards as "the plastic card without the interest".
"It's like your ATM card, except you can use it in a lot of situations, such as buying on the Net, where you couldn't use an ATM card." Some banks even offer to combine the two in a multi-access card — ATM and debit options on the one piece of plastic.
The upside
Two words: no debt. You get to shop like a diva, flashing plastic and carrying nothing but a clutch purse (and glossy store bags, of course). You can buy online without having to print out that 'pay me later' form (if the site even offers such an option). And all you're paying is the actual price … not the 14, 15 or 17 percent extra that it will cost you by the time you add on interest charges.
All of which means you're living within your means — there's no overspending when it's coming straight out of your account. As a bonus, it'll make you think twice, or even three times, about those impulse purchases… they don't seem as vital when you're actually paying for them!
The downside
Well, you need to have enough cash to cover your purchases. But this is both an upside and a downside. Yes, it curbs your spending sprees but, well, it curbs your spending sprees (see above). And the money you save on interest charges can be popped into savings … or spent on something else.
Prezzy Cards
The Prezzy is a pre-paid Visa card. Put simply, you load it up with cash and then off you go. On a traditional credit card, your balance goes up as you shop — on this one, the balance goes down! As another bonus, there are no annual or monthly fees.
The upside
You get a fully fledged Visa card — with all the convenience and wide acceptance that goes with that — without a credit limit (which means no credit check). Because it's prepaid, the Prezzy doesn't need to be attached to a bank account.
You can keep track of your cash by putting what you can afford to spend on the card and keeping the rent money separate. You could even get one for the kids — it's a heck of a lot safer spending online when there's a strict limit in place.
The Prezzy Card can be loaded with any value between $25 and $500.
The downside
Again, it's not a source of 'extra cash'. You need to have the money to spend it. But if you're planning a holiday, it's a terrific and safe way to carry money overseas. You get access to the Visa network of ATMs and outlets, and don't have to worry about travellers' cheques and foreign exchanges — and if your card is stolen, the thieves don't gain access to your entire bank account as they would with a debit card.
With a limit of $500 per card — you may be limited if you want to spend up big.
The Prezzy Card also costs $5.00 when purchased at a PostShop or $8.95 when purchased online (an additional administration fee of $3.95 is applied per card for all online purchases).
Go to New Zealand Post for more information.
Have your say below: do you use your credit cards too much? Or how do you get by without a credit card?
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