5 Reasons Living Without a Credit Card Is Easier Than You Think

I have a confession to make: I don’t have a credit card. OK, that’s not exactly true. I have one that I’m currently not using and have locked away. If that sounds crazy to you, well, it’s really not. Living without a credit credit is possible and there are good reasons why you might consider doing it.


According to the website Debt.org, more than 160 million Americans have credit cards. The average credit card holder has at least three cards. And the average American household with a credit card carries more than $15,000 in credit card debt. Considering the amount of debt Americans hold beyond credit cards -- mortgage, student loans, automobile -- it’s understandable why some people might choose to cut their plastic.

If you’re thinking about living without a credit card, first make sure that you actually have the ability to do so! Here are five surefire ways you can determine if you're financially fit to break free of the plastic.

1. You have an emergency fund


If you plan to give up your credit cards, you need to have enough money stashed away in case an emergency, such as your car breaking down or a health scare, happens. You should have an emergency fund anyway -- with or without having a credit card -- but it’s particularly urgent if you want to give your cards up. The amount you save in your emergency fund should equal at least three to six months’ of your expenses. Some experts even recommend nine months to a year’s worth of expenses!

2. You have an emergency credit card


It sounds contradictory to keep a credit card when you want to live without one, but the reality is that plastic does come in handy. Credit cards are particularly useful in emergency situations when you don’t have access to cash. So instead of cancelling your credit cards, consider locking one away in a secure place. Emphasis on secure. You don’t want to become a victim of theft. By locking your cards away, you can have them on standby in case an emergency situation arises.

3. You have good credit


Lacking a credit history -- or having bad credit -- might hurt your ability to rent an apartment, get a good mortgage rate, and can even affect your job prospects. For those reasons alone, you might consider keeping a credit card and just being extra careful about paying it off.

Luckily, your credit is not only based on how you use your credit cards, but also other types of lending like mortgage and auto loans. You can request a free copy of your credit report every 12 months from each credit reporting company at AnnualCreditReport.com.

If you’re still hesitant about getting a credit card, one option you might consider is getting a secured credit card, which allows you to charge as much as you deposit (though you need to be careful about which you sign up for). Unlike prepaid cards, secured cards report to the credit bureaus.

4. You have a debit card with a Visa or MasterCard logo


If you don’t want a credit card, you'll have to find a way to obtain money. And unless you are planning to live with just cash, then a debit card is a great alternative. Having a debit card will allow you to use money that you have in the bank without carrying cash around. The debit card you use should have a Visa or MasterCard logo on it because some retailers or hotels might not allow you to use a card without one. You want to be careful when using your debit card, though, because it’s still easier to spend money swiping the card than counting cash.

5. You are willing to use alternative methods of payment


Without a credit card, you might have to rely on alternatives besides cash to pay for purchases. Consider using layaway, which allows you to hold an item at a store and make incremental payments until it’s paid in full. You can also use the e-commerce website PayPal to buy things online if you’re worried about using your debit card over the Internet. A PayPal account is tied directly to your checking.

While living without a credit card is not for everyone, it is possible. If you can meet the aforementioned criteria, try cutting your plastic and enjoying life credit-card free.

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Ask a Question

Sunday, 03 Aug 2014 12:29 PM
<p>I've disabled my credit card and only use debit cards, and buying flights and withdrawing from ATM's overseas (at least in Australia, Ireland, England and Ecuador) has been easy for me. I had one of my debit cards skimmed when I was in Ecuador but my bank reimbursed me. I buy stuff online with my debit card sometimes, but I mainly use direct online payment (with "bankID"), both without a hitch. My bank is Swedish though, so it might be different from American banks in that sense.</p>
Monday, 09 Jun 2014 5:13 PM
<p>Much agreed Frank. The self imposed credit hell of my youth burnished my present dicsiplined use of credit. My CC's are a useful hedge against theft of my money in more than one way. I never let charges build up between statements paying them immediately as each tradeline allows. I treat each tradeline this way. If I don't have the funds to cover it, I don't charge.</p>
Monday, 09 Jun 2014 1:28 PM
<p>Without a credit card it's a lot of trouble booking a flight, reserving a hotel room or renting a car. A credit card is far safer than a debit or ATM card when it comes to fraud. Just have the ability and fortitude to pay the balance on the credit card each month and stay out of debt.</p>