At a Glance

Not everyone is eligible for a traditional credit card for various reasons, like a lack of credit history, poor credit score, or limited income. If you find yourself in this situation, don’t worry. There are several alternatives to credit cards that can help you manage your finances and make purchases without the need for a conventional credit card. Let’s explore ten credit alternatives and discover the reasons for credit card denial.

In this article, you’ll learn:


of people say their credit score caused them to be denied a credit card in 2022.

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10 credit card alternatives

1. Secured credit card

A secured credit card is an excellent option for individuals with limited or no credit history. With a secured card, you deposit a certain amount of money as collateral, which becomes your credit limit. This type of card allows you to build credit by making timely payments.

2. Retail store card

Many retail stores offer their own credit cards, which are often easier to obtain than traditional credit cards. While these cards are limited to use within the specific store, they can be a stepping stone to building credit.

Compare: Best Store Credit Cards

3. Subprime credit card

Subprime credit cards are designed for individuals with lower credit scores. While they might come with higher interest rates and fees, they can help you rebuild your credit if used responsibly.

4. Gift card

Gift cards are a convenient way to make purchases without using traditional credit. They’re preloaded with a specific amount of money and can be used at the designated retailer.

5. Personal loan

Personal loans from banks or online lenders can provide you with a lump sum of money that you can use for various purposes. They are usually based on your income and creditworthiness.

Find and compare the best loan options.

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6. Arranged overdraft

If you have a bank account, you might be eligible for an arranged overdraft, allowing you to spend more money than you have up to a certain limit. Be cautious, as overdrafts can come with fees.

7. Short-term loan

Short-term loans, often called payday loans, can provide quick access to cash, but they typically come with high-interest rates and should be used sparingly.

8. Electronic wallet

Digital wallets like PayPal, Venmo, and Apple Pay allow you to link your bank account or debit card and make electronic transactions without a physical credit card.

Compare: Best Digital Wallets

9. Peer-to-peer loan

Peer-to-peer lending platforms connect borrowers with individual lenders. These loans might have more flexible eligibility criteria than traditional banks.

10. Buy now, pay later

Some online retailers offer buy now, pay later options that allow you to make purchases and pay in installments over time. These services often don’t require a credit check.

Reasons your credit card application would be denied

There are several reasons why your credit card application might be denied. Here are some common reasons why your credit card application might be denied:

1. Limited credit history: A lack of credit history can make it difficult for lenders to assess your creditworthiness. If you have never borrowed money or had any credit accounts, lenders might consider you a higher risk because they have no evidence of your ability to manage credit responsibly.

2. Low credit score: Credit scores, often ranging from 300 to 850, measure your creditworthiness. A low credit score might indicate a history of late payments, high credit utilization, or other negative financial behaviors, which can lead to a credit card application being denied.

3. High credit utilization: Credit utilization refers to the percentage of your available credit that you’re currently using. If your existing credit accounts are close to their limits, it could signal financial strain and a higher risk of defaulting on new credit, leading to a denial.

4. Insufficient income: Credit card issuers typically require a certain income level to ensure you can make your payments. If your income is below their minimum requirements, your application might be denied due to concerns about your ability to repay your debts.

5. Recent bankruptcy or delinquencies: If you’ve recently filed for bankruptcy or have a history of late payments, defaults, or accounts sent to collections, lenders might view you as a higher risk. These negative marks on your credit report can lead to credit card denial.

6. Too many recent applications: Applying for multiple credit cards within a short period, known as a “hard inquiry“, can signal to lenders that you’re in a desperate financial situation or seeking excessive credit. Too many hard inquiries can harm your credit score and lead to denials.

7. Errors on your application: Incorrect or inconsistent information, such as mismatched addresses or employment details, can raise concerns about identity theft or fraudulent activity, leading to denial.

8. Debt-to-income ratio: Your debt-to-income ratio is the percentage of your monthly income that goes toward debt payments. Lenders use this ratio to evaluate your ability to handle additional credit. If your debt-to-income ratio is too high, your application could be denied.

9. Age requirement: Some credit cards have age requirements, typically 18 or 21 years old, depending on the card issuer. If you’re younger than the required age, your application will likely be denied.

10. International applicants: Certain credit card issuers might restrict offering credit cards to non-residents or international applicants due to logistical and regulatory challenges.


Lenders rely on your credit history to assess your financial responsibility. Without a credit history, they have no information to gauge your creditworthiness, making it challenging to approve a traditional credit card application.

In addition to the alternatives mentioned above, mobile payment apps, prepaid cards, and debit cards are popular for transactions without traditional credit cards.

Apart from the reasons mentioned earlier, recent bankruptcy, high credit utilization, or discrepancies in your application can lead to credit card denial.

Getting denied for a credit card isn’t inherently bad for your credit score. However, multiple denials in a short period can negatively impact your credit as they indicate increased credit-seeking behavior.