Could You Live Without A Credit Card?

by Jessica Sommerfield · 8 comments

The average American household carries roughly $15,000 in credit card debt, not including mortgages or loans. Economists are concerned both for the present generation’s debt problem (Millenials are projected to be in debt their entire lives), and for the Boomer generation’s ability to retire without racking up huge amounts of credit card debt.

With such unnerving statistics and the uncertainty of the economy, it’s no wonder that more and more Americans are focusing their efforts on debt elimination and cutting their credit cards once and for all.

One of the only sure ways to control excess spending is to force yourself to live without credit.

If getting and staying out of debt is as simple as this, why don’t debt advice gurus preach credit-card slashing? Answer: our society’s strong dependency on credit. In a society that’s practiced easy credit policies for the last several decades (a contributing cause of the Great Depression), it’s hard to imagine life without a credit card — especially in an increasingly cashless economy.

After all, we need credit cards to (1) conduct business and (2) build our credit score, right?

Conducting Business Without a Credit Card

Everything from paying bills to booking hotels, renting cars, and purchasing plane tickets “requires” us to use a credit card. Many businesses simply don’t take cash anymore, so cutting credit cards doesn’t seem to be practical.

Debit cards and pre-loaded money cards are one way to get around this obstacle. While some argue that heavy debit card usage leaves you more vulnerable to theft (since it’s linked to your personal checking account), more and more banks are offering protection policies and security measures that guard against card theft.

Pre-loaded money cards are the least vulnerable to identity theft, since they carry a limited amount of money and aren’t linked to an account. The only inconvenience is the task of loading them with sufficient funds before making purchases.

Building Your Credit Score Without a Credit Card

One of the arguments against cutting credit cards is that you may have an insufficient credit history when you request a car or home loan. Lenders are more likely to consider you a risk if there’s no record of how you handle debt repayment, and they could either decline your loan or charge you higher interest rates. There are several ways to get around this.

The first thing you should do if you’re trying to get a loan is check your credit history. Any type of loan repayments will show up. A solid repayment history on any type of loan is often sufficient to secure a good credit score without risking the temptations of owning credit cards.

If your score is good, you have nothing to worry about. If it needs some beefing up, or if you’re denied for insufficient credit, consider opening a checking account with a credit union and taking out a small loan. Credit unions are known for using other factors besides your credit score to determine your loan eligibility, such as solid account history and up-to-date consumer bills.

Benefits of Credit Card Slashing

Closing credit cards after you pay them off eliminates the temptation to go right back into debt. It also won’t negatively affect your credit score. Eliminating credit cards as a crutch will force you to build an emergency fund to fall back on instead of credit — a step that will put you in a more financially stable position.

You’ll also be more in tune with what you’re spending as the dollars slip through your hand, which will naturally curb your compulsion to spend more.  Ultimately, if you don’t have it, you can’t spend it. Lastly, living without credit cards requires living within your means, the most sound financial advice you could ever follow.

Could you live without credit cards? Have you tried? 

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{ read the comments below or add one }

  • Alex @ CreditCardXpo says:

    Interesting topic. Given how much I love shopping on the Internet, I don’t think I could live without my credit cards.

    • Cyrus says:

      How is shopping online any different between debit cards and credit cards? Every place I shop at online, I just put in my Visa card #, exp. date, etc. Debit and credit cards are processing exactly the same way online.

  • NCN says:

    I can and have for several years. We use a debit card and cash. Once in a while, just to keep the account active, I might charge a tank of gas or a meal at a restaurant. Other than that, it’s debit or cash.

  • Debra says:

    I use cash or a debit card, mostly cash because I spend less money. I am in the process of paying off one credit card and then I’m done with it.

  • Dr. Dina says:

    Yes i can live without them; I am a cash person anyway. I like Paying with cash as I feel that i have more control over my money. Although i do like my debit card.
    Less cridit cards is a good thing in my book.

  • Property Marbella says:

    Unfortunately we can not live without a credit card anymore; banks, buses, trains, airlines etc. do not handle cash, but only works with credit cards. Clearly it is important that you as the owner andvänder it right and in the best economical way to go.

    • Cyrus says:

      Yes, people CAN live easily without a credit card. My wife and I haven’t had a single credit card in five years, and have used plenty of banks, buses, trains, and airlines with no troubles at all. We use our DEBIT cards in these situations, which function exactly the same way as credit cards, except you can’t go into debt with them. Oh darn…

  • says:

    I use my Visa debit card all of the time but I have no doubt that I could live without my regular credit card. I have built up the balance and struggled to pay it off many times in the past and don’t want to go through that again.

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