The first service is Bill Me Later, a service that functions as an alternative to credit cards, which starts users out with a $500 line of credit, which is increased over time with responsible use.  Bill Me Later is an open-end credit account with PayPal, which can be used to make purchases online or over the phone without using a credit card.  Users then pay for Bill Me Later purchases slowly over time—like they would for credit card purchases. The interest rate on unpaid balances is 19.99 APR, not exactly cheap, but certainly comparable to the purchase APR of credit cards for people with bad credit.

Another useful service for people with bad credit, who have problems getting a credit card, is PayPal’s prepaid card service called MoneyPak, which allows users to add money to the MoneyPak card and then use it for online purchases and anywhere else where PayPal is accepted.  MoneyPak cards are available at thousands of retail locations, including Walmart, K-Mart, CVS, Walgreens, 7-11, and others. Consumers can pick up the card in the prepaid section of the store, take it to the cashier to load money for a fee, capped at $4.95. At home, users then log in to their Paypal account, go to the Add Funds section and select MoneyPak to transfer the money into their PayPal account for use online. 

Additionally, PayPal has partnered with MasterCard to launch a PayPal debit card with a rewards program that’s competitive with many offered by major credit card issuers.  PayPal debit cardholders who also sign up for PayPal Preferred Rewards will get 1 percent cash back on every purchase they sign for.  There are no fees and the card works at all merchants and ATMs that accept MasterCard.  The only difference is that this card draws from users’ PayPal account and not their checking account.

Also on the convenience front, PayPal has released a plan for mobile phones that lets users pay with their phone in-store, just like they would with a regular credit or debit card.  Users simply wave their cell phone in front of a specially-equipped payment terminal, and the payment is automatically deducted from their PayPal account.  Short of cash in your PayPal account? No problem. A new PayPal iPhone app lets users add money to their Paypal account by filling out a check, photographing both sides of the check with their iPhone, enter the amount in the app, and then send “the check” to PayPal for deposit. The amount will appear in users’ PayPal account within a few days.

What exactly are RFID-enabled credit cards?  RFID stands for “radio frequency identification,” and RFID credit cards feature small chips with credit card numbers and other information encloded to make payment simpler. Cardholders can simply wave RFID-enabled credit cards or debit cards over a scanner, and the transaction is complete.  More and more credit cards come equipped with RFID technology, and an increasing number of businesses are installing readers to accept them.

But will the same technology that makes it easy for businesses and merchants to read your credit card, also make it easier for thieves to steal your information?

Security expert Walt Augustinowicz believes so. He recently performed an experiment for Memphis-based CBS affiliate WREG in which he obtained the names, credit card numbers and expiration dates of random passers-by—without their knowledge. How? He simply used a credit card reader purchased online and a Netbook computer to skim credit card information off the RFID chips embedded in the credit cards “safely” tucked away in shoppers’ wallets.  He claims that any wannabe electronic pickpocket can work a crowd in the same way, collect numbers and send them anywhere.

According to Augustinowicz, the growing popularity of RFID-embedded cards means that more and more consumers are at risk. An estimated 100 million credit cards now feature RFID chips, and over the next couple of years, RFID technology is projected to replace the magnetic stripe on all credit and debit cards.

Of course, Augustinowicz is also the founder of Identity Stronghold, a company that sells secure credit card sleeves and wallets to consumers, so cynics might argue that he, perhaps, has a vested interest in exaggerating the risk. While the ability of electronic scanners to pick up the information right out of consumers wallet is well documented, the question remains if that information really can be used for actual credit card transactions.

Credit card companies argue that additional inbuilt security features render RFID technology secure, and that even if basic card information is skimmed by electronic pickpockets, it would be of no use. American Express, for example, explains that its RFID card, ExpressPay, generates a unique digital signature for each transaction, creating an unbreakable cryptogram.  Discover Card similarly notes that its contactless card, the Discover Zip, has a unique security feature, which changes the card verification code each time the card is used, rendering skimmed data useless.

MasterCard is similarly confident in the security of the MasterCard Paypass card featuring the RFID technology, arguing that the cards are as secure as credit cards with just magnetic strips, and perhaps even more, because the card never leaves the consumer’s hand.

Still, for people uncertain about RFID technology, there are easy solutions: wrap the card in tinfoil or an RFID blocking sleeve, or buy a special lead-lined carrying case or wallet, which will render it impervious to hackers. Credit card RFID blocking sleeves are sold for as little as $4.99, a small price, many will find, for obtaining greater peace of mind.

Dwolla founder Ben Milne encourages consumers to think of Dwolla as “PayPal without the fees.” Typically, Paypal and major credit card issuers charge processing fees of 2 percent or more, but Dwolla charges a flat fee of 25 cents per transaction, regardless of its size.  Dwolla can also be integrated with social networking programs like Facebook and Twitter to make sending money easier.  It is available for use by both individuals and businesses.

Once fully launched, Dwolla can be used in lieu of credit cards via a web app or via apps for Apple iPhones, Android phones, as well as the iTouch and iPad. The web service enables users to make payments via Facebook and Twitter. Like for PayPal, users can pay Facebook friends by sending them a link to access the Dwolla payment; the payment request is tied to the Facebook user account, so even if other people click the link, they won’t be able to access the funds.

Dwolla’s flat fee is expected to particularly appeal to small and medium-sized businesses, especially online ones.  The high processing fees (or “swipe” fees) for credit cards have been the subject of much debate recently, with merchants claiming the cost of processing drives up the price of their goods.  For them, Dwolla might present an appealing new opportunity.

The savings can be significant: if someone makes a $100 purchase from a website, the merchant could have to pay $2 to $3 or more.  If they make a $1,000 purchase, the merchant will have to pay $20 – $30 or more.  In both cases, Dwolla drops the processing fee to a mere 25 cents. Dwolla integrates easily into the checkout page of an online business as a payment option during checkout alongside credit cards and PayPal.

Dwolla has applications for brick-and-mortar businesses, too: a Des Moines restaurant called Mars Café is using the program as part of a new in-store payment system. Customers can pay by logging into their Dwolla account on their smart phone and sending the money instantly to the merchant—all from their phone, and all without cash, checks or credit cards.

Deposits held in a Dwolla accounts are insured by the FDIC and the National Credit Union Administration, and its transactions are secured by the same technology that protects online banking systems.

Will Dwolla catch on?  Nick Evans, president of The Veridian Group, a subsidiary of Veridian Credit Union, thinks so.  He says banks and credit unions are responsive to mobile banking and the integration of social networking, and that they are adopting these programs as fast as they can.  And online merchants looking to add 2-3 percent to the bottomline for each transaction, may well discover that, if Dwolla delivers as promised, there is little not to like about the service.

Here are a few tips to get gift cards to retail chains and restaurants without breaking the bank.

The easiest and cheapest way to find discounted gift cards might also be the closest at hand: your rewards credit cards. Many rewards credit cards, such as cash back cards, airline credit cards, and other types of rewards cards, let cardholders redeem rewards earnings for gift cards. Further, in most cases, gift cards can be issued to specific retailers with a higher face value than the cash back value of the rewards earnings redeemed, increasing the value of rewards earnings by as much as 20 to 50 percent. Some card issuers, like American Express, also offer holiday specials allowing cardholders to redeem points for call-purpose gift cards (usable everywhere) at a discounted point rate.

Another great place to look for discounted gift card deals are warehouse clubs like BJ’s or Costco, which often offer gift cards with as much as a twenty percent discount to restaurants and partner businesses. In addition, many stores roll out special deals around the holidays. Retailers often try to move units by, for example, offering a gift card along with the purchase of a certain product (buy this sweater and get a $20 gift card), or offering a smaller gift card as a reward for buying a larger one (buy a $20 gift card and get a $5 one).  Call ahead to your local stores, so you know where the best deals are.

If you’re looking for a gift for the foodie in your life, sites like Restaurants.com offer discounted gift cards at up to 50 percent off.  You can browse by location, cuisine and price, and the choices vary from big chains to local businesses.  But make sure you’re aware of any limitations, like a minimum purchase requirements or purchase exclusions.

The internet is perhaps the greatest way to shop for discounted gift cards from people trying to get cash out of gift cards they don’t want.  Gift card sites like PlasticJungle.com or Swapagift.com are a great source of discounted gift cards. Discounts tend to be around 10 to 15 percent of the dollar value of the gift card, and your purchase is guaranteed by the site, meaning you’ll get your money reimbursed if it turns out to be a scam.  The gift cards are sometimes in odd amounts—like 29.16 instead of $30—but you can always use the gift card to purchase a (discounted) present elsewhere.

Auction sites like eBay are another good place to look, and, frequently, one can find great deals on bundles of several gift cards.  Purchases here are often not guaranteed, so be sure to check the seller’s previous feedback, ask if there are any penalty fees or restrictions, and take a note of what the card’s expiration date is.

Finally, good Samaritan shoppers will often alert people to discounted gift card offerings on networking sites like Twitter.  Some of these offers are scams, but plenty aren’t.  If you know the source to be reputable and the fine print checks out, go for it.

Whatever the method, thrifty shoppers willing to do a little digging can find plenty of great gift card deals this holiday season—once you know where to look, getting great presents at a low cost could be as easy as a phone call, or even a mouse click away.

Of course, sticking with debit cards and/or cash is all well and good if you have money to spend. Unless you’ve saved ahead for several months, chances are that holiday expenditures will be higher than what you can cover with the cash in your checking or savings account. Last year, consumers were equally determined to cut back on credit card spending, yet as many as 13.6 million Americans are still paying off last year’s holiday debt, according to a poll from Consumer Reports. This year, after a two-year economic slump, savings accounts are likely even more tapped out for many consumers, making credit cards, once again, an attractive option to make the season bright.

So, despite our best intentions, come January, many of us are likely to start the New Year with the usual twofold post-holiday affliction: bulging waistlines and bloated credit card bills. To avoid this double-whammy post-holiday hangover this year, here are a few strategies to keep, if not your waistline, at least your credit card bills trim and slim.

1. Create a holiday spending budget. The most common warning sign of pending holiday overspending is hitting the malls with little idea of what you can afford to spend and which gifts you want to purchase.  To avoid this pitfall, make a list and check it twice. Make a list of the people you’re purchasing presents for, the price range of the gift you can afford, and preferably, the specifics of the gift(s) (and its price), you’ll be getting each person on your list. The more you plan ahead, the less you’ll be tempted to overspend once you hit the mall.

2. Determine how much to charge. Unless you already have high credit card debt, it can be fine okay to finance some holiday purchases and pay them off later, as long as you have a plan in place to pay off those credit card charges within a short time.

Determine your credit card pay-off strategy: do you want to be able to pay off the balance in full in January, or over the first three months of the New Year? Avoid charging more than what you can pay off within two to three months. Once you determine how you’re going to pay off the credit card bills, you’ll know how much you can afford to charge. Incorporate that into your holiday spending budget, and decide, which purchases you will pay for with credit cards, and which with cash.

3. Bring cash when shopping. For the most part, leave your credit cards at home, and make cash or your debit card the first choice for all shopping. Credit cards encourage impulse spending, so keep the shopping trips where you bring credit cards to a minimum. Only bring the credit card for those trips when you’ll purchase the gifts you’ve decided to charge.

4. Consider buying most gifts online. It is a shopper’s law of nature that the more time we spends in a store or mall, the more likely we are to buy things on impulse. Like impulse eating, impulse purchases are the bane of all well-intentioned thrift, and sure to cause those bloated credit card bills to drop into the mail box with a loud plunk come January. Online shopping offers a great way to avoid this pitfall. It is easier to get an overview of what you want to buy and far easier to comparison shop to find the best deals online.

In short, with a little bit of advance planning, you might find that it’s a lot easier to keep your credit card bills trim and slim as you celebrate the holidays, than it is keeping your waistline from expanding.

Bankrate’s survey looked at 54 different gift cards—46 of which were from major retailers and restaurants, and 8 of which were “network-branded,” meaning they are associated with either the Visa, MasterCard, Discover, or American Express credit card brand and can be used anywhere that accepts that credit card.  These two main types of gift cards are also referred to as “closed-loop,” (cards that can be used at a single retailer) and “open-loop,” (cards which have a credit card brand).  Guidelines and fees differ based on whether the gift card is closed- or open- loop.

Network-branded, open-loop gift cards are more versatile, because they can be used in any store where the issuing credit card brand is accepted. However, open-loop gift cards often come with fees.  These include inactivity fees—which can run as high as $2.50 per month if the card is inactive for a year—as well as purchase fees, which are deducted at the point of sale.  Inactivity fees, however, are unlikely to affect most consumers, as the majority of gift cardholders spend the full value of the card within one year.

Closed-loop store gift cards are less versatile, since they can only be used at a single retailer chain like Best Buy, Borders, or Starbucks. However, this type of gift cards for the most part comes without fees.  Only one of the closed-loop cards in the Bankrate survey charged an inactivity fee—$1.20 per month after two full years of nonuse—and it was lower than what the open-loop cards charge.  None of the closed-loop cards charged purchase fees at the point of sale.

Network-branded cards can also expire, which closed-loop cards almost never do.  But recipients should have ample time to spend the full value; new regulations introduced by the CARD Act stipulate that gift cards must remain valid for five years.  Additionally, American Express and Discover gift cards don’t expire, but have “thru-dates,” meaning you have to replace the card if you don’t use it up by a certain date.

Besides fees and expiration dates, some gift cards come with desirable features you may want to look out for.  Half of the store cards surveyed offered “e-delivery,” meaning you can email the gift card to its recipient without paying a shipping fee, a great advantage for last-minute shoppers!  Most cards will also allow the gift cardholder to check the balance online: according to the Bankrate study, 37 of the 46 store cards had this feature, as did 7 or the 8 network-branded cards.  Many gift cards also come with protections if the card is lost or stolen; however, some feature a replacement fee.

Shoppers’ main concern this year is sticking to their budget, causing more people to plan on leaving their credit cards at home.  Only about one in four consumers plan to charge their gift purchases this year, the survey found, which is the lowest number since 2002, and about the same as the number of consumers planning to pay with cash.  Debit cards will likely be the preferred method of payment, with four out of ten consumers reporting that they plan to use primarily debit cards for their holiday purchases. The NRF report was based on a survey of 8,778 consumers.

The number of shoppers who name credit cards as their primary form of payment for holiday gifts has fallen every year since 2007. In response to the recession and unstable economy, many consumers have been paring down credit card debt and cutting back on credit card usage.  The NRF survey reported that 61.7 percent of shoppers said the economy would impact their holiday spending, although that number is down from last year’s 65.3 percent.

Still, the NRF estimates that holiday sales will rise 2.3 percent this year to $447.1 billion.  These numbers indicate that Americans are loosening their purse strings a little, but are more wary of going into debt to finance their holiday purchases. This is in line with the result from a recent American Express survey, indicating that many holiday travelers plan to increase travel-related spending.

“After years of practicality, Americans are slowly getting back into the spirit of giving gifts their family and friends may not buy themselves,” said Phil Rist, the Executive Vice President of Strategic Initiatives, BIGresearch. “Many people will make a list and check it twice, but the fun of buying someone a gift they’ve had their eye on all year never gets old.”

Many retailers have introduced their holiday deals and savings early this year, with the hopes of wooing tentative consumers.  It may be working: 10.5 percent of survey participants said that they had finished at least half of their holiday shopping, compared with 9.2 percent last year.  That said, more than half (51.1 percent) said they had yet to begin their shopping.

The survey also indicated that discretionary spending is up.  The percentage of people who reported they would ask for jewelry is up 13 percent, and the percentage who said they would buy at least one gift from a discounter is down.  Additionally, the number of people who predicted they would make non-gift purchases for themselves rose 8 percent.

“Consumers will still shop with the economy in the back of their minds, but we’re starting to see shoppers take baby steps toward a new normal,” said NRF President and CEO Matthew Shay. “As Americans open up their wallets for more discretionary gifts like jewelry or take advantage of sales to buy for themselves, retailers will begin to truly believe that the worst may be behind them.”

There are numerous charity rewards cards available from major credit card issuers like Chase, Bank of America, and so on. In addition, many regular rewards credit cards, like the Discover More Card, offer cardholders the option to donate cash back earnings to charities, rather than redeeming them. American Express lets cardholders donate Membership rewards points to the Membership Project, a charitable and volunteer initiative sponsored by American Express.

Like any other credit card, charity credit cards have pros and cons.  One big benefit, of course, is that you can give to your charity of choice without having to think about it; each time you swipe, the charity benefits. And while the rewards earnings passed on to the charity are just a small percentage of the charge, they add up faster than one might think.

Charity credit cards generally offer terms that are competitive with the best of other types of rewards cards. Most cards offer cardholders 0% introductory APR on balance transfers and interest rates comparable to other rewards credit cards; some cards even offer rewards for cardholders as well.

Some examples of charity cards include the National Wildlife Federation card from Chase, and the Special Olympics card and American Heart Association card from Bank of America. Other popular charity credit cards include Working Assets, the Target REDCard, the OneCause Card, and the Heritage Affinity Services Advantage Card.  Bank of America offers one of the widest selections of affiliate cards for various charities related to health and social causes, as well as nature and wildlife preservation.

The real power of charity cards is that donations add up over time. The percentage passed on to charities per transaction is small—typically between 0.3 percent and 1 percent. Still, on average, earnings on charity cards wind up being about $190, more than many consumers would give if they donated by check once or twice a year.

Perhaps the greatest argument against using charity credit cards is that the rewards earnings generated from a charity card are less than what you’d generate with a premium cash back or rewards credit card, which can earn cardholders anywhere from 1 to 5 percent cash back on charges. A recent U.K. study, which largely applies to U.S. charity credit cards as well, found that if cardholders saved the money earned on a traditional rewards credit card and donated it to charity, the donation in most cases would be significantly more.

Still, for busy consumers, finding the time to sit down to transfer rewards to a charity may be a non-starter. If that description fits you, the automatic donations offered by charity credit cards, even though smaller, at least are consistent and require no effort on your part.

Case in point is Iowa-based Metabank, which following an inquiry from The Office of Thrift Supervision, recently discontinued its prepaid card payday loan program. Why? The OTS judged the 650% interest charged on Metabank’s iAdvance program, which enabled customers to take out a payday loan using prepaid cards, to be, well, unfair.

Welcome to the not-so-brave world of payday loans and alternative banking services. Payday loans, as the name implies, are small loan advances on paychecks, which are paid back automatically once the borrower receives his or her paycheck, unemployment checks, or public benefit money. 

Because Metabanks’ interest rates were uncapped, the interest cost on the prepaid card payday loan advances in some cases rose as high as 650%, particularly for loans not paid back within two weeks.  Because the repayment of the loan was deducted automatically from the paycheck or public benefits checks, it bypassed laws that protect minimum income and forbid corporate garnishing on benefits like Social Security.  Needless to say, with annualized interest accumulating at more than six times the original loan amount, debt from even one of these short-term loans can pile up quickly.

Defenders of payday loans say they are one of the few loans available to people with subprime credit and that the interest rate has to be high in order to protect lenders from the high level of defaults in the subprime consumer segment. Without cash-advance loans, some claim, many people would be living in much worse conditions.

The National Consumer Law Center (NCLC), on the other hand, praised the OTS move.  “The OTS should be applauded for shutting down this abusive product,” said Lauren Saunders, Managing Attorney of the National Consumer Law Center’s DC office in a statement after the announcement. “We hope that other regulators will follow suit to stop triple digit lending that is designed to be unaffordable and is based on the bank’s ability to seize the consumer’s benefits or wages and not the consumer’s ability to pay.”

The NCLC also drew attention to the fact that Wells Fargo Bank, U.S. Bank, and the Fifth Third bank offered similar predatory payday loan programs.  They urged the OTS to take further action.

Some states are already working to stop payday loans.  This November, the issue will hit the ballot in Montana, where voters will decide whether a more reasonable 36-percent cap rate on cash-advance and payday loans should become law.

The Metabank program was different from regular prepaid credit cards, because the money was not paid up front like normal prepaid cards, but rather loaded onto the card as an advance against users’ paycheck or benefit money. Many prepaid credit cards come with more reasonable terms.

Consumers looking to take out short-term payday loans may want to check out their local credit unions, many of which offer payday loan programs with less usury terms.

The data came from the Fed’s quarterly survey of the senior loan officers at 57 US banks and 22 US branches of foreign banks. Twelve percent of the banks surveyed indicated that they had eased credit card approval standards over the past quarter, while 85 percent said their standards were unchanged.  While small, the shift indicates that both large and small banks have finally begun to ease consumer lending practices for the first time since the onset of the 2008 credit crisis. According to the survey, many banks were also more willing to issue other types of consumer credit, such as installment loans. The previous Fed survey of senior lending officers, for the second quarter of 2010, showed that large U.S. banks were more willing to extend loans to small businesses for the first time since the end of 2006.

Even while it may be getting easier to get a new credit card, existing cardholders will likely continue to feel the strain: Most banks reported that they continue to scale back credit lines for existing credit card accounts. 

Cardholders with high credit scores will be the first to benefit from easing lending standards. Thirty-eight percent of banks agreed that lending to prime borrowers would resume over the next year and be restored to pre-recession levels by the end of 2012. Borrowers with fair or bad credit will likely have to wait longer—only 13.6 percent of banks said lending standards for non-prime cardholders would return to long-range levels by the end of 2012, while more than half, or 54.5 percent, said that the lending standards for the subprime market would remain tight for the foreseeable future.  

While lending standards may be easing, it remains to be seen if consumers and businesses are ready to borrow. Despite record-low interest rates, the demand for loans both from businesses and consumers remains low; consumers continue to pare back on credit rather than taking out new loans.

The economic recession was triggered by banks’ unwillingness to lend to businesses and consumers in the wake of the subprime mortgage debacle and the numerous fall-outs from that crisis. Today, even as banks begin to ease lending practices, weak demand for credit has become a major hindrance to economic recovery. With unemployment still close to 10 percent, consumers borrow and spend less, giving companies less momentum to hire and expand.

In a much-criticized move, the Fed recently announced a $600 billion buy-back of Treasuries in an effort to lower interest rates further on business as well as consumer borrowing. The plan, dubbed QE2, which stands for quantitative easing, seeks to jumpstart business borrowing and consumer spending by lowering interest rates on long-term business loans, mortgages, and consumer loans. The Fed has already kept Fed funds rates at zero or near-zero since the onset of the economic recession, leaving the Fed little other recourse than buying Treasuries in an effort to lower interest rates further and stimulate economic growth.

The Fed’s attempts to increase lending by lowering interest rates have previously been thwarted by banks’ continuing unwillingness to lend. While complex and risky, the Fed’s new move to stimulate the economy may at least stand a greater chance of success if the current early signs of easing lending practices continue to unfold, and lending to prime borrowers returns to pre-recession levels.