Live Without Credit Cards

The best way to escape from our mindless purchase economy is to ignore your credit cards in favor of pure, reliable cash. Credit cards undoubtedly have value – purchase protection, rewards, convenience – but only for consumers who use credit responsibly. No Credit Needed wrote a useful guide for anyone willing to live the credit-free life.

Life without plastic requires a few components:

  • Budget: Every month, NCN writes out a comprehensive budget: “I divide my salary into three major categories – Give, Save, Spend – and then I break those categories into smaller sub-categories. For example: Give – Tithes, Offering, Charity. I then allocate, on paper, all of the funds that I receive for the month into those sub-categories. I spend every dollar, every month, on paper, before the month begins.”
  • Payments and Spending: NCN makes payments either through his online account or with plain checks. For internet purchases, he uses a debit card.
  • Transfers: NCN dips into his high-interest savings account once per month. We do the same, and enjoy the financial discipline imposed by limited trips to the cookie jar.

A cash-only lifestyle isn’t for everyone, but it’s an easy way to force yourself to consciously consider each and every purchase.

How I Live Without Using Credit Cards – My Simple System For Living On A Budget [No Credit Needed]
(Photo: danesparza)


Edit Your Comment

  1. ogman says:

    Excellent plan. I’ve only just recently started using my debit card for online purchases. Credit card companies have become so asinine, I look forward to getting rid of my credit accounts.

  2. INconsumer says:

    the best credit card to get is a secured credit card. its impossible to screw yourself over that way. you give a bank like $550, they give you a credit card with a $500 limit. you can’t charge off that way. plus on a credit bureau, it doesn’t look like a secured card so no one else knows the difference. its a great way to establish credit, or get a low interest rate (usually around %7) if you have damaged credit. the only catch is you have to have the $500 up front. its like borrowing from yourself, but it builds credit. worse case senario, you rack up $500, can’t pay it, and call it even.

  3. INconsumer says:

    btw….not all banks offer a secured card so shop around.

  4. MsClear says:

    I generally only use one of our credit cards, and pretty much use it exclusively for online purchases. A debit card would make me nervous online. In the event of fraud, you could have checks bounce before they fixed the errors.

    But for store purchases and the like, I favor cash, though sometimes I use debit at a brick and mortar store.

  5. quagmire0 says:

    Self Control = Free Money

    I use credit cards for everything, pay off the bill every month (following a budget helps) and collect my reward money. Unlike most people, it seems, my wife and I have more trouble misspending cash than credit. :P

  6. speedwell (propagandist and secular snarkist) says:

    I learned my lesson years ago, when I heard a cousin from Hungary ask my father how it was that Americans could afford all the shiny new cars, big houses, and vactions abroad, when we didn’t actually make that much more money. Dad said, “They can’t afford them. They buy them on credit and then they sweat when bill-paying time came.” Our cousin’s eyes got wide and he said in a quiet, shocked tone of voice, “You mean… they spend money they don’t know if they’re even going to have?”

  7. matvey says:

    Or you could, um, be responsible. I buy what I can afford, pay the entire bill on time every month, and have a pretty good time living within my means. Without looking it up, I couldn’t even tell you the interest rate on the card that I use because I’ve never paid a dime of interest on the thing. The best investment is not going into consumer debt in the first place.

  8. Scuba Steve says:

    Car rentals? Online purchases? Vacation spending? There are some things money can’t buy. I know first hand.

  9. speedwell (propagandist and secular snarkist) says:

    @Scuba Steve: I manage to do all those things without a credit card. It’s not hard. You just have to know what to do.

    My company used to have a policy where you would pay for business trips up front and get reimbursed. I happened to be in the elevator with the CFO one day and politely asked him what they did for people “who had successfully gotten themselves out of debt or who were identity theft victims and didn’t want to or couldn’t use their own credit cards.” He looked surprised, as if I had presented the case in a way he hadn’t thought of before. A few months later I received a company credit card.

    As for online purchases, I use Paypal backed by a debit card when possible, and the debit card itself when the merchant doesn’t accept Paypal. I haven’t had any problems. YMMV.

    And on my last vacation, I stayed in a perfectly lovely little vacation cabin in the Hill Country of Texas, four hours’ drive from my home. They accepted a cash deposit.

  10. cayton says:

    @Scuba Steve: Including an iPhone apparently….


  11. ShortBus says:

    Secured credit cards are among the most asinine ever. You send the bank money and then, instead of them paying *you* interest, you actually get charged interest to borrow against your own money. There’s absolutely no risk on their part and they get to make interest by investing your cash and then charging you to use it. I can see the two Guinness guys now: “Brilliant!”

  12. Wrathos says:

    I’m in the middle of getting ‘debt free’ and I did it by hiding my credit cards so I don’t have immediate access and I pay for EVERYTHING with either cash or debit card.

    I was $16k into credit card debt and after a year of double / triple payments and using ‘found money’ to make extra payments, I’ve got $4k to go and have never felt better about my finances.

    Highly recommend this plan.

  13. dayid says:

    Credit cards are only bad if you cannot manage them. Interest rates don’t hit unless you aren’t pay the “full-due” each month. If you use them wisely they’ll save you a few bucks. Credit cards force you to account for your spending, as you can see that you spent XX on fuel and XX on food w/o having to save 500 receipts.

    I use a few credit cards, one for work-expenses, one for my monthly bills, one for “all else” – so while I’m waiting 30 days to get a bill for spending that money, my savings and short-term CDs and other deposits are earning me interest – whereas if I dropped cash immediately I would not be.

    Lastly, when you go to purchase a vehicle, etc, it’s nice to go in and know you have a slammer credit-score, because you have active, upkept, and good credit, vs a cash-only person – what, are you now saving 20-30,000 in cash to purchase your car instead of getting a loan for 5-6% and investing spare cash into money-markets and CDs for 5-6% interest so that you end up “paying cash” for the car – over 4 years?

    I’m just tired of people acting like credit cards are inherently bad, they are far from bad, it’s just people’s habits that make them bad. These “cash-only” people I know are the same ones looking for financial advise when they try to purchase a home, car, or even furniture or renting a vehicle.

    Eh, after all my blathering – summary: it’s better to learn to use tools like this than to avoid them because you can’t control yourself.

  14. dayid says:

    @Shortbus: You aren’t paying any interest on any credit card unless you aren’t paying off your full amount each billing period. So with a secured card vs a debit card, debit it would be taken immediately, so no more interest on that money because it’s gone. With a secured card you’re still getting the 30-45 days where your cash in the account is earning interest, before you’re required to pay it to the credit card balance.

  15. LostDog says:

    We’ve not had credit card for several years now. I travel all the time on business and for fun and never have run in to an issue. Even out of the country I had no problems renting a car.

    For online purchases, get a second (free) checking account with a visa/mastercard Debit card. Use this ONLY for on-line purchases. When you buy something, transfer the money from your main account over to the “online purchases” checking account. We use wamu and have never had any issues.

    People with credit cards don’t realize how freeing it is to not be under the thumb of a credit lender (even if you “pay” it off every month (and to be honest, I don’t believe most peole who say they “pay” them off. Many simply mean they pay the min balance every month. A recent study by the feds showed that ~70% of people don’t pay their balance every month. Funny how nearly everyone says they do!))

  16. Jeffrey2132 says:

    I read an article about how the use of cards, credit or debit, is dwindling the youth of today’s view on the value of a dollar. I agree with this completely. When I first got a debit card, I was swiping away and it felt like nothing. Now that I’m 18 and deliver pizzas, I get tips and keep cash in my wallet. I never use my debit or credit cards anymore other than gas and I rarely randomly spend money. I’m also more conscious of what I’m spending.

  17. edwardjrtx says:

    I defenately agree with this article. Having a credit/debit card to use in daily purchases makes you not understand the value of a ‘dollar’, ‘lira’ or whatever your currency is. Use more ‘hard cash’ when possible. It’s also a good idea to invest in gold but that’s another story for another day, haha.

  18. DallasDMD says:

    Well, I pay *my* balance off every month. Credit cards are a convenient way to pay for goods/services, and if you pick the right card, are a great way to get free money back for purchases you make.

    Plan a budget and stick to it. If you are so impulsive that you can’t handle the temptation of a credit card, perhaps you should deal with those issues first! I don’t mean to be mean, but the problem is with the user, not the card, IMHO.

  19. says:

    with anything, you have to have self discipline. plenty of cards offer gifts and such, which might be worth it. i don’t have a credit card but when i do, i plan on purchasing things that i’m able to pay off in 1 or 2 payments. you’ll establish good credit quickly, and maybe get a free beer cozy :)

  20. pshah says:

    @DallasDMD: I agree. I also pay of my balance and get 5% back on gas purchases every month and 1% on rest. There is, however, a push to make it easier to spend money… credit card peddling on campuses, those new credit cards that you just have to tap instead of swiping, etc, etc… it fuels the consumption mentality of this day and age and lets the consumer give into their urge to splurge… same with loans that let you borrow more than you can afford… it is user’s problem but it enables them to get in trouble… cause that’s when the cc companies make money off the account… just my 2c.

  21. hypnotik_jello says:

    Hah, won’t be able to buy an iPhone on cash anymore! Guess that’s a good thing if you’re on cash-based budget.

  22. jamar0303 says:

    The nice thing about credit cards is fraud protection. I’m a bit jumpy about buying things online without a “safety net” if things go wrong. In stores, there’s a near-zero chance of ID theft if I use cash, but online I have to use something with an identity associated with it. In that case I’d rather use something that won’t drain me of money if something screws up and someone goes to town with my card.

  23. humphrmi says:

    I get the concept of this article, there are ways to live without credit cards. But it doesn’t actually get to the real point – credit cards aren’t the problem, they enable the real problem, overspending.

    If you can get your overspending under control, credit cards become a great tool. I just deposited a HUGE rebate check from my credit card company, to whom I paid zero interest in the last 12 months. And if I buy something online and someone snags my CC number, instead of the fraudulent spending coming directly out of my checking account until things get cleared up (like a debit card would), the charges sit with the CC company until they clear it up.

    I encourage everyone to get debt free. But getting rid of all your credit cards for it’s own sake is silly, unless you have no willpower.

  24. JustAGuy2 says:


    Your call, but I’d much rather take the cash back and the free loan from the credit card company.

  25. karlmarx says:

    If you want the best consumer protection, and the best service if you use a credit card, American Express bar none is the best card/company to use.

  26. cv says:


    and to be honest, I don’t believe most peole who say they “pay” them off.

    Go look at any detailed article on consumer credit. Half of all cardholders pay off every month and carry no balance. The other half carry a balance, which averages out to nearly $10,000 per household, if I recall correctly. That means there are people who get it (live within your means) and people who don’t.

    Note that if you build up an extremely high credit score (my FICO average is 810), you get better rates on loans. That kind of score is essentially unattainable unless you have credit cards.

  27. edrebber says:

    Most banks will happliy let you overdraw your account with a debit card, and hit you with a $30+ overdraft fee. If you can’t manage a credit card you can’t manage a debit card or a bank account.

    And what if the bank doesn’t let you overdraw your account and refuses payment? Bouncing checks can be a criminal offense.

  28. MyCokesBiggerThanYours says:

    @LostDog: You don’t believe us when we say we pay them off? I’ll have you know I pay my card off every month since the summer of 2002. I have zero debt. No loans, no mortgages, no car payments. Nothing.

  29. BugMeNot2 says:

    I tried from the beginning (think highschool) to live by cash only. I never had a credit card… now that I’m a 30 y/o who’s never had a card. I can’t get one cause they say I don’t have enough of a credit history. Cell phone companies ask for a $400 deposit on a new account!!! It’s funny and sad at the same time… I’ve been penalized for bucking the system. I have to use a prepaid credit card to make online purchases, it works but prepaid cards have a per-transaction fee, also fees to reload the card and balance maintenance fees for having money on it for more than a month.

  30. Mr. Gunn says:

    Yeah, I’m going to take financial advice from a guy who tithes.

  31. speedwell (propagandist and secular snarkist) says:

    @BugMeNot2: Bug, the cell phone companies are crazy. I was in the same position as you, for the same reason, so I told them to get stuffed and I went with prepaid. Turns out I spend about ten percent overall of what I would have spent if I got the plan I was after. I like the control and the fact that I OWN MY OWN UNLOCKED PHONE. If you go this route, check out Aria Cellular online or on eBay to get your unlocked phone (I deal with this fellow and he is a delight).

  32. JustAGuy2 says:


    You’ve never given the credit card companies any evidence that you can handle credit, so they’re got no basis to believe that you will in fact pay back your loans. It’s like driving – they won’t just take your word for it that you can drive, you need to show that you can drive to get a license, and the longer you drive with a clean record, the lower your insurance costs are, since you have a positive track record.

  33. theblackdog says:

    I locked my credit card up a few days ago, I find I don’t miss it.

  34. UpsetPanda says:

    I know that I pay off my credit card bill every month, in full. Can’t say for a lot of people, but I’m guessing that these people are outspending even ME, a self-confessed shopaholic, to be unable to pay their full balance every month. Heck, I have two cards and I pay them both off. I don’t even make that much, and I live in a metropolitan area. I’m not sure what kind of situation you have to be in in order to be unable to pay off a bill every month. If you can’t pay the full balance, consider spending dramatically less.

  35. speedwell (propagandist and secular snarkist) says:

    @theblackdog: When I was doing the same, I took my cards and put them in a two-quart-size deep Tupperware container, then filled the container with water and stuck it in the freezer. My cards were still available if I had to use them, but I would have to take the frozen ice block out and allow it to thaw first, which would have taken at least a few hours. Time enough to emotionally separate myself from whatever I HAD TO HAVE THAT SECOND, anyway. :)

  36. anatak says:

    We cut ours up years ago. Never missed them once. We save more money by not using them, then we ever got back in rewards or other BS. And no, we never carried a balance either. Was really quite liberating.

  37. bobblack says:

    I’ve done without a credit card for 28 years. Debit cards work just as well and force you to budget.

    Self discipline is quite rewarding.

  38. hexychick says:

    After pulling myself out of a 5 figure debt, I have lived on a debit card and cash/check only for the last 5 years. I have never been happier. It’s really not difficult to live that way either.

  39. ltlbbynthn says:

    I don’t see what the big deal of living without a credit card is. How can it be hard? I see the problem of digging out of debt bc my mom has a few cards with low total debt, but every paycheck she puts most of her money to pay off the balances then uses the cards again. I wish she made enough to pay the credit cards off AND still afford to eat