No Credit Cards Needed

Feb 22 2007

Posted by NCN as Cash, Credit |

Here’s my system for getting through life without using credit cards.

Cash

–I always have $200 cash on me. I carry my cash in a money-clip.

Debit Card

–I always have a Debit Card on me. I carry my Debit Card in my money-clip. I wrap my cash around my Debit Card.

Checkbook

–I have a checkbook which I keep in my wallet. I only write about 5 checks per month. My checkbook usually stays in my glove-box. If I have to write a check, I will tear a check from the book, fold the check, and put it in my money-clip.

Wallet

–I have a wallet. I hate to keep it in my pocket, so it usually stays locked in my glove-box.

Credit Card

–I have a credit card that I never use. It stays in the back slot of my wallet.

In the past 2 years, I’ve only made two purchases which required more than $200 in cash. On those occasions, I withdrew the cash from the ATM, put the cash in my pocket, made my purchase, and went about my way.

Renting A Car or Reserving A Hotel

–I have rented a car AND reserved a hotel using my debit card. (I know that some companies require reserving a car with a credit card. So, if pressed, I could RESERVE the car with my credit card, but PAY the bill with cash. So far, I have not had to deal with this situation.) When I checkout or return the car, I pay my bill in cash or use my debit card.

Plane Ticket

–I’ve never flown, so I have no idea how this would work.

On-line Purchase

–I have a secondary checking account with a fixed amount of money. This account has a debit card. The account does not allow “over-drafts”. I use this debit card associated with this account to make on-line purchases. I’ve never had a problem using a debit card or getting a refund. I’ve used a debit card to pay for items from Amazon, pay my hosting fees, and manage my satellite radio bill.

Bills

–I use free on-line bill-pay to pay all of my bills. I’ve never had a problem. In fact, my local doctor was impressed with the fact that I could use on-line bill-pay to pay my doctor bill. I actually showed him how to setup an account with his bank!

As you can see, living without a credit card is pretty easy. I’ve yet to find myself in a situation where I “had” to use a credit card. I make sure that I keep enough cash “on hand” to meet most situations, but not so much that I’m overly concerned about losing it or having it stolen. IF someone where to steal my wallet, they’d get a single credit card, my license, and about 10 checks. If they were to rob me, they’d get about $200 and a debit card. There are risks associated with every method of carrying money, but I feel pretty secure with the the technique that I use. If I am travelling, I will, of course, take my wallet out of my glove-box and put it in my back-pocket. (Wallets are SO 1985!)

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16 Responses

Moneymonk

February 22nd, 2007 at 11:06 am
1

Wow, you pretty much describe it.

I myself do not have a credit card. The only problem I have is renting cars. Airline tickets is no problem.

For as renting cars Alamo and National the only ones that show me debit love. The rest only do debit cards at the airport and you must provide them with a roundtrip ticket.
Sam

February 22nd, 2007 at 11:53 am
2

Debit cards are no problem for booking and paying for airline tickets.
Tom

February 22nd, 2007 at 5:51 pm
3

Debit cards can be used as credit cards…so there will never be an issue from the “no credit card” standpoint.
Clever Dude

February 22nd, 2007 at 6:47 pm
4

Hmm, if I can find where you live, then I can be $200 richer! In cash!

I’d love to go cash only, but I just don’t have the discipline I need with cash. Credit card spending is not my problem though. It’s getting out of the debt I put myself into years ago!
Tim

February 23rd, 2007 at 3:56 am
5

Tom, this is not true. there are differences. one being the available cash/credit limits, travel benefits, liability, etc.

car rental: although many rental cars in the u.s. will accept debit cards (some are changing and is local area dependent), many will put a hold as they do on your credit card. depending on your daily limits of your debit card and available funds in your checking account, you are going to be tying your available cash up to two weeks until the hold falls off of your account. You can call the company directly to release the hold authorization, but it normally takes just as long for them to do that as it would be to wait until the hold drops off.

there are also travel benefits to renting a car with a platinum credit card.

You should recognize that debit cards are more risky in the event you lose them, get them stolen, or someone gets your PIN. they will have direct access to your accounts and you will more than likely be liable for most of it since it is considered different than a checking account which limits your liability.

With that said, you should check with your bank on daily limits for cash withdrawals from your debit card. The standard is between $200-$400 cash withdrawal per day and $2000 POS. You can increase or decrease these amounts permanently or temporarily. If you do not have a need for as much daily cash withdrawal, you can lower the daily limit and request temporary increase for the day you need more or go to the bank to withdraw. This can be inconvenient, especially on the weekend, when your bank considers the entire weekend one day.

Depending on where you travel, it is normally best to purchase with credit cards and get cash with your debit card, especially overseas.
Greg

February 23rd, 2007 at 1:35 pm
6

How do you do car rentals?

I especially like credit cards for busness expenses. Using my cash-back card is like lending my company money at 1% APR
db

February 23rd, 2007 at 4:56 pm
7

If you need a credit card, one option you don’t hear discussed very much is to get a pre-loaded credit card.
Quang

February 24th, 2007 at 3:43 am
8

Credit Cards Sucks… but don’t you need the credit? Or having credit will come in handy when you want to buy a house etc? lol The phone places makes you pay a deposit if you don’t have sufficient credit… no credit, is the same as bad credit, and that’s bad in general. Although I hear of business people getting rich without having much personal credit….
Money Articles For The Week Ending February 23, 2007 » Silicon Valley Blog About Money

February 24th, 2007 at 10:17 am
9

[...] @ No Credit Needed talks about how he goes about his days with No Credit Cards Needed. It’s a nice peek into someone’s money habits and seeing how he manages without credit [...]
Tim R

February 24th, 2007 at 9:56 pm
10

make sure you do your homework, before you get or work with credit.
Clarendon

February 26th, 2007 at 8:17 pm
11

NCN,

It seems that you know yourself well and you’ve made a commitment to stay credit-card free to keep yourself debt free. If that keeps you out of debt and feeling better about your financial situation, then godspeed.

I would like to point out that smart use of credit cards can make you money. If you’re smart and disciplined enough - which you clearly are - to stay out of debt, avoid fees, and pay off the balance each month, you can earn 2% or more return on the free monthly loan (grace period) from credit card companies as well as cash-back rewards programs. Of course the slimey credit card companies don’t tell you this because they try to sucker you into fees and debt wherever possible, but if you spend a bit of time looking at your options and doing the math you’ll see that buying EVERYTHING with a credit card and maximizing your return from it can be quite profitable.

There is an article on the goldenstraw.org wiki on “HOWTO Pick the best credit card” that has the details on the best credit cards to use when you’re debt-free as well as a list of some cash-back rewards programs. Of course the returns you can get vary based on how much you spend and whether your credit is good enough to get a good cash-reward card, but it is something to consider.

Great blog! Keep spreadin’ the good word!
Brian Christopher

February 27th, 2007 at 12:01 am
12

I stopped playing the credit game years ago. I pay cash wherever I go. I feel free and liberated! People have suggested I should have a credit card “in case of an emergency.” But I can not think of one emergency I would have that would require me to finance it. If I couldn’t borrow money from friends in a dire emergency then what does that say about me as a person?

Being on a cash only basis has its rewards. You are living in reality and you know exactly what you can afford and when you can afford it. My self importance is not tied to material possessions.

If I should find it necessary to carry a large amount of cash (ie: going on vacation) I always break it up on my person. I’ll store a little in my wallet, some in my sock, some in a money clip, and maybe some in a carry-on bag. If someone ever demanded I give them “all my money” I could easily hand them the money clip or my wallet and not be completely wiped out.
VG34

February 27th, 2007 at 10:42 am
13

I have to disagree with your article above. When purchasing something with cash, you have no recourse should you need to return the product and the store not allowing it. what about 5% cash back on gas cards, your actually spending MORE money by using cash than if you could charge up with gas and pay it off automatically monthly…
old grump

March 5th, 2007 at 3:31 pm
14

Carrentals and debit cards are a tough mix, it is a secret as to what is required on your debit card, suddenly I was denied (plenty of money in the acct, rented from them a month earlier), which killed my vacation. I will never fly anywhere and depend on a debit card to rent a car. I have no debts and am a renter and thus I can’t get a credit card.
Larry

April 25th, 2007 at 3:10 am
15

I wonder at the statistic that people spend that much more when using a credit card–how was it obtained?

My credit card purchases are much higher than my cash purchases for one simple reason: I don’t like carrying more than $60 or $80 in cash, so when I buy a camera, or an iPod, or a computer, or a few housewares, naturally I use a credit card.
Fiona

May 2nd, 2007 at 2:16 am
16

Being credit-free is quite alright but if you know your way around it, you can actually benefit from a credit card. I’d have to agree with VG34. He does have a point. All you have to do is hook up with the best cash back credit card.