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Could You Live Without A Credit Card?

Monday, June 3, 2013 - 5:47 PM
From US News & World Report via Yahoo Finance:
Some 29 percent of 1,004 respondents ages 18 years old or older to a 2010 poll by CreditCards.com said they did not own a credit card - around a 10 percent jump from the number of respondents who reported having no credit cards in 2009. For many people, saying goodbye to credit cards helps them stay out of debt and take more control of their finances.

... A 2008 study led by Priya Raghubir, a professor of marketing at New York University, reinforced evidence from earlier studies that consumers tend to spend more money when paying with credit cards than they do when paying with cash.

Credit cards also alter a consumer's mindset when contemplating a purchase. A 2012 study published in the Journal of Consumer Research found shoppers who charge an item to their credit card focus on the benefits of the purchase, while those who pay cash focus on the cost.

Consequently, many consumers who give up credit cards begin to pay closer attention to where their money is going and develop the discipline to spend less.

Read more

An executive from the National Foundation for Credit Counseling quoted in the article states that people who decide to live on a cash basis end up saving around 20 percent of their previous spending - and they do it without feeling deprived.    

However, individuals who choose to avoid credit cards may encounter other problems while trying to conduct normal business.
7
pearlbrownpearlbrown1,473 posts since
Nov 2, 2010
Rep Points: 6,402
1. Monday, June 3, 2013 - 9:13 PM
At my last travel a few days ago, I was surprised to see most people are paying stuff with cash.  Maybe it is a paradigm shift.
6
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
2. Tuesday, June 4, 2013 - 6:37 PM
A simple solultion would be to know how much you can spend for the month. Keep a checkbook register with your credit card and deduct each expenditure from the balance that you are allowed to spend. 

This way you will not over spend. Keep that amount in your checking account and have your bill paid in full from your account each month. That way you still can benefit from the cash rewards. 
3
Ally6770Ally6770934 posts since
Jan 16, 2010
Rep Points: 2,717
3. Wednesday, June 5, 2013 - 12:57 PM
These days it is necessary to have a credit card to develop a credit history, without which it can be a pain in the a**. My son graduated college without a credit card. He had two checking accounts and two debit cards. Unfortunately he did not have a credit history so he had difficulty with passing the credit check for renting an apt. I had to cosign a loan so he could buy a car. He even had difficulty with his cable TV company because of the lack of a credit history. He has a credit card now, but if we had to do it over again, I would have got him one much earlier.
2
loulou552 posts since
Aug 3, 2010
Rep Points: 3,431
4. Wednesday, June 5, 2013 - 1:16 PM
I could live without a credit card but unfortunately (as Lou states in his post) we seem to need one to build up a credit history.  Now that I am in to using one (only)I find it very convenient for autopays and for those days when I go shopping and the bill is more than the cash I have on me.  I can always just charge it knowing I will make sure I put enough money in our checking account to cover the autopay.  However, if it weren't for the credit history deal, I could go back to just paying cash if I had to.
2
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
5. Wednesday, June 5, 2013 - 3:13 PM
So ,am I to believe that people without credit cards go around with $100’s of dollars in their pocket? If so, seems to me that this practice is not maximizing the use of their cash. They are losing interest and  the cash rewards  offered on  the credit cards. I prefer keeping liquid cash in a high yield money market account that generally earns $25 per month interest. Then transfer money to my checking account when bills are due. In addition, I collect $200 to $300 a year from my credit card cash rewards.
1
FARFAR108 posts since
Feb 26, 2013
Rep Points: 386
6. Wednesday, June 5, 2013 - 3:50 PM
FAR: That is how most of us here are practicing (RCAs + credit card rewards).  But people who pay cash has a more prudent way of budgeting (buy what you have cash for).  It is also somewhat safer (vs. credit card fraud).  Of course, there are positive sides of credit cards (purchase protection, convenience, etc.). 

The point is that some people just prefer using cash for everything.
5
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
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