How to Live Without Credit Cards
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Wondering how to live without credit cards? It’s totally possible. And you’ll feel so much better knowing things are paid for.
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Once upon a time I thought it was impossible to live without credit cards. Even if I had the funds “to pay it off every month,” it was the convenience I couldn’t live without.
Or so I thought.
Our month went like this: spend, spend, spend. Get the bill. Pay it with our monthly income, wiping out most of our cash on hand. Start all over again.
Sure, we “used credit cards responsibly.” We paid off our balance every month and tried to be frugal. But we were spending funds we didn’t yet have, counting on having enough at the end of the month to pay the bill.
This worked fine for us until we hit a slick patch of unexpected unemployment and then it was a slippery slope into debt. Cutting out our credit cards was the first and major step to our getting out of debt and learning to live within our means.
If you’re struggling to get out of debt, you have to get off the ferris wheel. You can’t keep acquiring new debt and expect to wipe it all out. This book is also a good one to read.
A friend called one day with some burning questions about credit cards. They have a great income and plentiful savings, but she felt that she was paying three mortgages when it came time to pay the credit card bills. They “use credit cards responsibly,” but she realized that she was enslaved by them.
There must be a better way, right?
Photo Source: Dplanet
Live without credit cards? How? We’ve done it now for eight years. We live better now than we did before, so I have zero regrets.
Here’s how we make it work:
How to Live Without Credit Cards
1. We don’t carry any credit cards.
There’s plenty of plastic in my wallet, but it’s my debit card, store discount cards, and gift cards that now weigh me down.
You can’t spend what you don’t have. And if you don’t have a credit card in your wallet, you generally can’t use it. That’s easy.
Some people freeze their credit cards in a glass of water and store it in the freezer. That makes it hard to get to. Some banks will allow you to turn the card on or off in your account.
2. We closed all our credit card accounts.
Yes, yes, we did. Once the accounts were paid in full, we closed them. We made it as difficult as possible for ourselves to go back to our old credit-spending ways.
3. We use our Visa debit card or Paypal for online transactions.
There’s no excuse that you have to use credit cards to shop online. It just isn’t so. I pay almost all our bills online without a standard credit card. Either I write an electronic check from our bank account or use our VISA debit card.
VISA debit cards have all the same securities and protections as a regular credit card, but the funds come directly from your bank account, bypassing a bill and a life of credit.
When I swipe the card, I know that I’m paying with my own money and not the credit card company’s.
Photo Source: mangpages
4. If we buy something big, we pay for it with cash.
It is rare that we make large purchases on a whim. We tend to research and think about the purchase ahead of time. This helps us make sure we really want it as well as to secure the funds in cash or check to pay for the item.
We saved our pennies for two years in order to fund our trip to Europe. Rather than spend money we didn’t have, we knew that everything was paid for. This made the trip so much more enjoyable than coming home to a stack of bills!
5. We use cash, check, or debit card to pay for things.
When money was super tight and we were aggressively fighting debt, we pulled cash from the bank and divvied it up into different envelopes. I know from experience, the envelope system works.
Since we paid off all our debts, we’ve gotten a little more relaxed about the envelope system. We have a budget and keep our spending in check.
6. We spend less by not using credit cards.
Feel free to disagree, but the proof is in the pudding. Statistics show, as does my experience, that we are more likely to overspend when the money is not instantly removed from our possession. Using a credit card gives one a false sense of having more than we really do.
7. We are saving for the Big Kahuna.
College, retirement, and a house purchase are all big expenses, experiences that tempt people toward borrowing money and living on credit. We desire to avoid those temptations.
Currently, we do not own the home we live in. Our philosophy? Until we get a big enough down payment and home costs are low enough, buying a home (and the ensuing mortgage) would be “renting money.” And renting is renting.
In the meantime, we’ve been squirreling away extra money so that as the FishKids head to college or we really do find the right house, we are in a good position to pay cash or a huge down payment for those things.
Are we worried about a good credit score? We have one. We’ve paid off our debts. And we plan to put huge down payments on anything that might involve a look at credit scores. Read this perspective on credit scores for more information.
One instance when a credit card can be a good idea: International Travel
When we went to Europe, we needed to be able to access our bank account from abroad. We certainly weren’t going to carry thousands of dollars in cash, and traveler’s checks are a thing of the past.
While we did use our VISA debit cards overseas, those transactions were subject to fees. Prior to our departure, we opened a travel credit card account that was only for the trip. We paid for our on the ground travel expenses with a combination of cash (pulled from the French or English bank via our debit cards) or credit card. Since then, the card has sat in the safe, awaiting our next trip overseas.
In anticipation of our next trip, we’re looking into a Charles Schwab Checking Account that provides fee-free international transactions.
To live without credit cards may seem radical. But, it is very doable. And it can save you money.
Do YOU live without credit cards?
*This post was originally posted June 24, 2010 and has been updated.
There’s nothing here I don’t agree with. 🙂 That being said, I do have a credit card and I don’t believe I’m enslaved by it. I use it for gas or to reserve hotel rooms/rental cars. I just don’t like the holds that those places can put on debit cards. There’s nothing “wrong” with using a debit card for those purchases, but it’s not my preference. I do not spend any more money on gas this way than I would any other way… I’m not prone to lots of senseless trips w/ three little kids in tow. 😉 Great post and something we all need to think about.
@JessieLeigh, love that bit about the senseless trips in the car with three kids. LOL.
I just found your site. Nice place. I will be returning. Yes, living without credit cards has its challenges but for me, it IS the best way.
It’s inspiring to read about people who have actually been there-done that. We are climbing out of debt slowly, but we are no longer using credit cards and are trying to switch to the cash only system. We are spending less, for sure.
I have read, though, that it’s not good to use your debit card for internet purchases, even if it does carry the logo, because if it gets swiped, they can drain your checking account. I have been putting off purchasing on Amazon because they don’t take PayPal. Several months ago, I did buy some things online and got a call from the fraud department asking if I’d purchased $300 of books from Japan. Um, NO! They caught it and closed my card and reissued another one, but it left me leary of doing any online purchases again.
Any advice?
@Cheri, we got those kinds of calls when we were using credit cards, so I don’t know that makes a difference. Security told me that someplace where I had swiped the card had made an imprint and a new copy of the card. The fraud had been perpetrated with an actual card, not just the number. So, in fact, it was face-to-face use that led to fraud, not an online purchase.
Visa says that the “Visa debit card” has the same protection as a regular credit card.
JessieLeigh (below) says that there are some holds on debit cards. I’ve not had that problem yet. But, I live in a cave. 🙂
@Cheri, While debit cards are protected just the same as credit cards when used online, something like this might ease your mind. I’ve heard of many people that set up separate bank accounts that they can easily transfer money in an out of. They then get a debit card for that account. When they get ready to make an online purchase they simply move enough money over to the account attached to that debit card and make the purchase. That way, if something were to happen with online fraud, they won’t lose money that’s in their account.
Hope that’s helpful!
I know this is an old comment, but the commenter is right about not using debit cards online. I used a debit card online, and the next day my debit card was denied when I went to the grocery store.
Went home and looked at my bank account, and it showed several amounts pending for transfers to Spain! All the money in my account!
The bank had caught it though and everything was straightened out, and I got my money back.
From now on though I use paypal or a credit card online – it’s just not worth it to use a debit card. You don’t want thieves accessing your bank account.
I think it really depends on who you bank with. We have a VISA debit card that guarantees our money is safe.
I KNOW that I spend less at the grocery store if I don’t use a debit card or credit card. Last year at this time, we were still using our credit card. While we paid it off every month, we weren’t gaining any ground in our savings account.
I decided that I’d take cash and cash only to the grocery store. I was able to cut our bill down drastically because of this. Anyone who is hesitant to stop using your credit card or debit card, try taking cash to the grocery store for one month and see what happens.
We have a credit card which we use very infrequently. It’s convenient though when my husband has to charge things for work that he’s reimbursed for later. We have NO desire to go splurge and use our credit card. For those who have that as a temptation, I believe they have to get rid of them completely.
@Johnlyn, excellent suggestion!
Great post, Jessica.
We have lived without credit cards for several years and it is one of the best financial decisions we have made for our family. Thanks for hosting the linky!
Happy Friday! Thanks for the linky. We cut up our credit cards. Awesome experience. I didn’t realize I had any “faith” in them until the feeling I got when we decided to snip them up. I’m excited to let GOD be my security blanket now! Not a piece of plastic that can only compound problems when you truly hit hard times!!!!
Amy @ http://www.thecheapandchoosy.blogspot.com
We do these same things, too, FishMaMa… and I can testify that they do WORK! Being credit-card-free is great and doesn’t have to be an inconvenience.
We are working toward being completely debt-free. With the Lord’s help, we have been able to be mortage-free (we paid cash for our house and 5 acres) for a year now. It’s down to a small loan on a property, then we’re free and clear.
I really appreciate your emphasis on finances, frugality, and avoiding debt– it’s SO easy to get entrapped in the spending cycle in our culture!! Thanks for this post.
Kristy @ Homemaker’s Cottage
I pay cash for everything too. After paying off $20K in debt I won’t go back to it. It’s been almost 5 years now and feels great. My husband has the credit card (as he’s wayy more disciplined than me) and we use it for “the big stuff” but that’s it.
Great article. I might even send it to my husband. We use cc “responsibly” by paying off at the end of the month, because we want the points, but I’m sure we would spend less if we gave them up. Something to think about.