Shopping Without Credit

Borrowing money is going to get harder and more expensive. That means it's time to save that plastic for special occasions and think about moving toward a new way of spending. But it doesn't necessarily mean going back to cash.

If you read Dealing With The Next Crisis: Credit Cards, credit card interest rates are going to go up, credit limits down and your credit score is going to be more important than ever. You are going to want to be very careful about how you use your credit card. In other words, you should probably consider using it less.

Before you have an anxiety attack about the thought of doing all your holiday shopping with cash or using your debit card for online purchases, there are other ways to shop that don't involve borrowing money.

eBillme.com, which has been around since late 2005, works sort of like online billing. After you buy something online through eBillme, you select the "eBillme" payment method, log directly onto your checking account and pay. The process is similar to how you might pay your cable bill.

"Think of it as a secure, cardless, debit transaction," says Marwan Forzley, CEO of eBillme.com.

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The difference between eBillme and a debit card is that with eBillme you don't need the actual card to make your purchase; you just need your name and eBillme account number. This way you avoid sharing any valuable information, such as your credit or debit card number, online. eBillme also offers fraud protection, shipping protection and a "best price" guarantee, so if you find the same thing you already bought at a lower price, they will pay the difference.

eBillme is not the only site helping us live more cash-friendly. Google (nasdaq: GOOG - news - people ) Checkout lets you enter your debit card information into their secure site. Then when you purchase an item from a site that works with Google Checkout, you just log into your account and click "purchase." The merchant never sees your information and, like eBillme, Google Checkout offers fraud protection.

BillMeLater.com is another site that lets you make purchases online without using a credit card. BillMeLater's services are offered through CIT Bank and, as the name suggests, BillMeLater allows you make a purchase and then bills you for it later. You can pay your bill with a check in the mail or through your checking or savings, similar to eBillme.

One downfall with these alternate payment methods, though, is that not all merchants will accept them. More are starting to, but right now you may have to settle on shopping at specific stores.

You may think if you stop using your credit card your credit score will go down, but this isn't necessarily true. In fact, your FICO score may actually improve if you use credit cards sparingly. (And pay off your monthly bills, of course.)

You'll only find yourself in bad shape if you stop using credit all together. If you have no credit at all, you need to build a history to create a payment history for your FICO score. However, a purchase with a credit card even once every six months is enough to keep your credit score active. Consider putting just one monthly purchase, such as your cell phone bill, on your card. This way you're continuing to build a credit history, but you're also charging a low, consistent amount to your card, which will hopefully make it easier to pay off.

Credit cards have always offered us many add-ons as encouragement to use them. But now that there are other options, at least for shopping online, consider using them. Once you start paying for purchases directly from funds you've already earned, you may find that you don't need an item as much as you once thought you did. It's just one more stop to being a better saver.