Living Without Credit Cards – Update


Yup, I was in the Red!

It’s been about 2 months since I quit credit cards. A lot of people thought that I was crazy for doing this, whether it was giving up “free” rewards, losing out on consumer protections, or making life more difficult with car rentals. But I really haven’t missed any of those things in this time. Here’s how it’s gone so far:

1) I over drafted my checking account. This is something that I’ve never done my while life, but I attribute this almost 100% to no longer using credit cards. Why? Because before I would just spend money, whether I had it or not, and not have to worry about balances until it was time to pay the credit card. Luckily, I wasn’t charged any fees for the overdraft, but I have to monitor my checking balance more carefully.

2) I’ve opened a PerkStreet account. After finding out that I can get 2% back for the first three months regardless of my account balance, I just couldn’t resist. I’ve used it somewhat so far, but I haven’t used it as much as I could because I simply haven’t fully-funded my PerkStreet balance from my USAA checking account. I’m not 100% sure I’ll go with PerkStreet long-term, but it’s nice to get some good cash back on debit purchases for now.

3) I’ve thought hard about purchases. Since I’m relying 100% on what’s in my checking account and not on credit, it’s forced me to work harder to budget my money between paychecks. This isn’t something that comes easy to me, but it’s necessary because I typically keep a bare-bones amount (<$500) in my checking account because I like to throw money at debt right away instead. I can no longer put off contemplating whether or not the decision to spend is a good idea. When you’re paying cash, it’s 100% about the present moment rather than realizing it was a bad idea when you’re credit card bill is due.

4) I haven’t made other purchases. Using debit has kept me from making some purchases. When I haven’t had the money in my checking account to make semi-large purchases on Amazon, I’ve taken a few days or more to really think about it. This has been huge for preventing impulse buys.

5) I haven’t run into any trouble without credit. While I haven’t rented a car or anything like that, there haven’t been any situations in the last two months where I’ve been stuck because I didn’t have a credit card. I don’t really buy into all that “consumer protection” stuff too much. I never took advantage of that before anyway, so I don’t think it would make much difference to me now.

6) I spend less time checking credit card balances. I’ve enjoyed not having to compulsively check my credit card accounts regularly, and it’s even better that I don’t have to worry about how to pay the balances on them at the end of each month.

Other than what’s here, living without credit hasn’t affected life too much. I think it’s been better to go without it in the ways listed, and I don’t think I’m missing out on much of anything in living without them.

p.s. – I’m still not going to debate with you whether credit cards are good or bad. I know a lot of people believe in credit cards for their own reasons. I just don’t.

p.p.s. – Quick Debt update: I’m down to about $1,500 in total debt left! This is all student loans, and I’ve been paying about $1,100 a month towards it the last three months (which is about 1/3 of my monthly net income). I’m on track for my goal to pay if off my the end of 2011!

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photo by: zachflanders


  1. You have more successful than I at turning away from credit cards. I have weakened occasionally because I haven’t established a sufficient cash operating reserve. Glad you avoided large expenses with this switch.

  2. Fantastic Jeffrey!  It takes a very disciplined outlook to do what you are doing.  I wish you the very best!  

    Make sure you set up alerts on your debit card purchases.  Debit cards don’t have the same protection as credit cards and the sooner you report suspicious activity, the better your chances of reducing liability.  Alerts are a great help.  

    • Thanks, MC, and great tip! I do check my balance regularly on my account (every 48 hours at most), so I feel like I’m pretty secure.

      Also, as far as I know, if I’m using debit as a credit card (which I do 90% of the time), I have the same protections as any other Mastercard or Visa. Is that correct based on what you know?

  3. I love credit cards, not because I carry a balance, but because the liquidity, convenience and rewards.   Yes, I probably spend a little more than if I went 100% cash, but for me the benefits outweigh the costs.  But, talk to me if I lost my job, I would likely move to a cash budgeting system on the spot. 

    • Good points. One question: if you admittedly spend “a little more than if you went 100% cash,” of what value are the rewards? Even if you spend 3% more with credit than cash, you’re probably wiping out the value of the rewards. This is part of what moved me off of credit cards.

  4. Good going on the credit card fast.  We use our one card sparingly, but it’s a no-frills, no cash-back or rewards kind of card.

  5. That’s awesome.  It sounds like it is especially useful for the impulse buys.

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