How You Can Live Without A Credit Card

[tlbwriter]

So basically the article said the way to live without credit cards is to not use them, and save up and pay cash for everything.

Thank you, Captain Obvious

Yeah, I'm going to write an article on how to avoid spending a lot of money on medical bills. It will be called "Don't Get Sick."

 

[Ava]

BTW what credit card charges interest the minute you make a purchase. I have never heard of such a thing.

There were rumors/articles about this floating around when the new CC laws went into effect, but I've never personally heard of a card or company that actually adopted this policy. If anyone has, I'd be interested to hear about it.

The idea was that CC companies would use "immediate interest" as a way to make money off of the "deadbeats" - people who pay off their card in full each month. However, at least when it was discussed on this board, all of us "deadbeats" said pretty unanimously that we'd just cancel our cards if any company actually adopted a policy of immediate or daily interest charges.

I also use CCs for the rewards. I pay them off in full each month so I never pay interest. (I wasn't always this way, I did have CC debt up until about 5 years ago.) I think if you are disciplined enough to pay them off each month & not overspend, CCs can be a great tool.

Also, as Purseval said, I like the protection a CC gives me when shopping online or making a large purchase. I've heard too many stories of people who's debit card number was stolen & their account completely drained, and it took several days to get their funds restored by the bank. If your CC number is stolen, it's not your money being taken & it's much easier to get the charges reversed.

 

[Purseval]

There were rumors/articles about this floating around when the new CC laws went into effect, but I've never personally heard of a card or company that actually adopted this policy. If anyone has, I'd be interested to hear about it.

Years ago we were offered a credit card that had no fee but accrued interest from the date of purchase, which meant that it was impossible to pay it off on time and not get charged. We passed on it and I don't know if cards like that still exist. But they definitely did exist at one time.

 

[pamlet]

I'm always amazed how the credit card issue brings out such emotion.... generally from those who have cards ..

If "paying it off every month" were so easy - there wouldn't be the huge amount of credit card debt out there - also credit card companies wouldn't exist - they count on people paying that interest .. so much so they are willing to draw them in with "free stuff" ...

We chose not to have credit cards a number of years ago - admittedly because we (like the MAJORITY) did not have the discipline to pay them off every month... yep I'll admit that.

It took a change in our thinking - don't buy what you don't have money for ..

As to "car repairs" on the road - this summer my transmission went out while on the road ... I took it to a transmission place, rented a car, continued on my vacation, came back picked it up - all without a credit card - I had the money in the bank - period ... I had PREPARED .. Didn't need a card for "leverage" ..

 

[MrsPete]

I don't personally feel chasing the rewards the cards offer is a way I want to earn money. My profession is more enjoyable for me. If I want more income, I just work more hours.

I don't think anyone's suggesting that credit card rewards are "income" (and when it comes to income, many of us don't have the option of working more hours if we want more income -- if we did, plenty of people on this board wouldn't write in looking for work at home jobs, etc.) Credit card rewards are more of a nice little perk.

And wouldn't you like a gift card or reward miles without any extra work and with no effort whatsoever? That's what those of us who use credit cards wisely are getting. Literally for free.


The real question isn't whether you stick to cash or use credit cards (as if anyone actually uses only one form of payment in EVERY situation). The real question is whether you're able to manage your finances well -- the tool you choose to use to do that is secondary.

 

[MrsPete]

Years ago we were offered a credit card that had no fee but accrued interest from the date of purchase, which meant that it was impossible to pay it off on time and not get charged. We passed on it and I don't know if cards like that still exist. But they definitely did exist at one time.

I can't imagine anyone would read that paperwork and say, "Hey, what a great choice for me!"

 

[ICF]

I'm always amazed how the credit card issue brings out such emotion.... generally from those who have cards ..

If "paying it off every month" were so easy - there wouldn't be the huge amount of credit card debt out there - also credit card companies wouldn't exist - they count on people paying that interest .. so much so they are willing to draw them in with "free stuff" ...

We chose not to have credit cards a number of years ago - admittedly because we (like the MAJORITY) did not have the discipline to pay them off every month... yep I'll admit that.

It took a change in our thinking - don't buy what you don't have money for ..

As to "car repairs" on the road - this summer my transmission went out while on the road ... I took it to a transmission place, rented a car, continued on my vacation, came back picked it up - all without a credit card - I had the money in the bank - period ... I had PREPARED .. Didn't need a card for "leverage" ..

And to me it seems that the "emotion" generally comes from those that think CC's are the work of the devil and nobody should use them just because they themselves weren't responsible enough to use them (or Dave Ramsey told them not to!! ) in a way that would benefit the user and got themselves in trouble.

Hey, if you like paying cash go for it....and I hope you enjoy paying cash for the hotel or airfare you just bought as well. I, a responsible cc user, will be using my points and getting it for FREE (which, btw is even better than using cash)!!!

 

[Gigi22]

Oops!

 

[scrapquitler]

The idea was that CC companies would use "immediate interest" as a way to make money off of the "deadbeats" - people who pay off their card in full each month.

But they make lots of money off 'deadbeats' like me who pay their bill every month....in the form of the fees merchants pay. The merchant pays a % of each transaction to Visa/Mastercard and the bank. Everytime I buy groceries, McDonalds, Gas, etc, the credit card companies ARE making money off of me (indirectly) even if I never pay a cent in interest charges.

 

[SaraJayne]

I'm always amazed how the credit card issue brings out such emotion.... generally from those who have cards ..

If "paying it off every month" were so easy - there wouldn't be the huge amount of credit card debt out there - also credit card companies wouldn't exist - they count on people paying that interest .. so much so they are willing to draw them in with "free stuff" ...

We chose not to have credit cards a number of years ago - admittedly because we (like the MAJORITY) did not have the discipline to pay them off every month... yep I'll admit that.

It took a change in our thinking - don't buy what you don't have money for ..

As to "car repairs" on the road - this summer my transmission went out while on the road ... I took it to a transmission place, rented a car, continued on my vacation, came back picked it up - all without a credit card - I had the money in the bank - period ... I had PREPARED .. Didn't need a card for "leverage" ..

Just because you use a credit card doesn't mean you don't have the money to pay for it.

I don't know how many times and how many different ways that can be said.

Some people still don't get it.

 

[bettymae1121]

Yeah, I wasn't too impressed with this article either. If you have the disapline to stick to a cash-only budget, I don't understand why one wouldn't have the disapline to use a CC for all purchases and then pay it off at the end of the month. To me the only difference is how you pay at the time of purchase.

I put on average $2k of purchases on my CC every month, and pay it off in full every month. I earn a free airline ticket every year for stuff I'm going to buy anyway. We have a budget, we stick to that budget. The only difference is we use a CC to pay instead of cash, and just pay off the CC each month.

We do have CC debt from our wedding, that should be paid off by the end of 2011. But we made that choice to do that, just like making a choice to take out a car loan or a mortgage. That debt is parked on a fixed low interest credit card, and we use a rewards card for our regular purchases. We haven't charged anything since then without paying it off in full, and don't see that changing. IF the CC companies start charging interest as soon as you charge it, meaning that I'd have to pay interest even though I'd pay in full each month, then of course I'd get rid of the card and go to cash or debit, but until then I'm happy with my CC and my free airline tickets.

 

[indimom]

Seems like a pretty simplistic article, I thought there might be something new or different in there. We went for years without a credit card, it's not rocket science. No cash, don't buy. You'd be surprised what you can live without when you have to.
We didn't get a card again until we had learned how to budget better. Once we got that down and had a nice emergency fund, we got a couple cards back and...I love my rewards card. Put most purchases on it each month, pay off each month, no interest, earn rewards. Works for me.
Like others have said, if the credit card companies start to make changes, then we can always go back to a cash basis (or debit cards), but in the meantime I like my rewards.

 

[marie1203]

I think that as long as you are responsible and understand each credit card you have then you are good. We have 4 credit cards (between DH and I). And we never carry a balance, our credit cards don't have annual fees and they do have rewards. We paid them off every month to keep our credit going. It had help us have great credit.

 

[SandrA9810]

But they make lots of money off 'deadbeats' like me who pay their bill every month....in the form of the fees merchants pay. The merchant pays a % of each transaction to Visa/Mastercard and the bank. Everytime I buy groceries, McDonalds, Gas, etc, the credit card companies ARE making money off of me (indirectly) even if I never pay a cent in interest charges.

Until you're living some place that every store charges you 45 cents to a dollar to use a debit card or credit card. That's one incentive to stop swiping so often.

 

[scrapquitler]

Until you're living some place that every store charges you 45 cents to a dollar to use a debit card or credit card. That's one incentive to stop swiping so often.

The only places I've ever heard of that charge extra to use a credit/debit card are some of the gas stations in my area, and I just avoid those particular gas stations.

 

[Dreamin Disney]

Dave Ramsey gives some very good pointers on how to live debt free and without credit cards or for that matter credit. I believe that it can be done.

 

[allison443]

Until you're living some place that every store charges you 45 cents to a dollar to use a debit card or credit card. That's one incentive to stop swiping so often.

Or just to stop shopping at those stores

I have never seen that anywhere, btw. Where do you live that "every store" charges this fee? Even chain stores like supermarkets, drugstores, target, etc.?

 

[JB2K]

I haven't had a credit card in many years. I don't want one. I keep thinking of seeing about prepaid ones that may build credit up. But not sure that works.

You may be confusing prepaid MasterCard/Visa cards with Secured Credit Cards .

Prepaid cards will not appear on any credit reports, since they are the same thing as a debit card. Secured cards, on the other hand, generally require a security deposit equal to your credit line (the deposit money is typically held in an interest-bearing savings account). Secured cards can also be a good tool to establish/reestabish credit.

 

[JB2K]

I have never seen that anywhere, btw. Where do you live that "every store" charges this fee? Even chain stores like supermarkets, drugstores, target, etc.?

Chain stores of all types do not levy these charges on the consumer (you will find these charges at certain mom-and-pop shops), as chain stores leverage the swipe costs in their operating expenses.

 

[pintamino]

Until you're living some place that every store charges you 45 cents to a dollar to use a debit card or credit card. That's one incentive to stop swiping so often.

It's actual illegal for the merchant to pass that cost on to the consumer. They can offer a "cash discount" but cannot legally pass that fee along to you.