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How to Love Your Life Without Credit Cards

With just one swipe, you can have anything your heart desires (up to your credit limit, of course).  

Brand new pair of Jimmy Choos? Done. What about a fancy all-inclusive vacation to Mexico? Done. A brand-new Tesla? If your credit limit is large enough . . . then done. Last summer, I read a story about a woman’s baby who accidentally ordered a $10,000 upgrade package on the Tesla app with her saved credit card info! Talk about an expensive mistake.

While swiping a credit card (or entering it online) has become a part of our culture, it doesn’t have to be a part of your life. Listen: Living without credit cards is possible! You can even love your life without credit cards

The Lure of Credit Cards

Now don’t write me off yet . . . I love spending money as much as the next person, maybe more—sorry, Winston (he’s my husband). But while I love spending money, I hate credit cards. Why? Because credit cards make it easy to go into debt.

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When you pay with credit, you end up spending way more money than you intended by the time the bill comes. And spending your hard-earned paycheck on things you’ve already done, movies you’ve already seen, and food you’ve already eaten is a bummer. It’s like you’re living your life through a rearview mirror!

That’s no way to live! But it hasn’t always been that way. Just a few decades ago, credit cards were much more of the exception than the rule.

How Credit Was Born

In 1950, the first multi-purpose credit card was created. As the story goes, Frank McNamara forgot his wallet while at dinner in New York City. Poor Frank’s wife had to come pay the tab, and he was so embarrassed that he vowed to never let that happen again. So, he discussed the idea of credit with the restaurant owner. And just a few months later, Diners Club International was born. Get this: The original Diners Club card was cardboard. Cardboard!1

It didn’t take Americans long to love the idea of credit. Within the first year, Diners Club had 42,000 users.2 

In 2021, a study we did here at Ramsey Solutions found that eight in 10 Americans have a credit card. And among those with a card, four in 10 are carrying a balance and racking up interest. Ouch.3 In just a few decades, we’ve gone from a society that rarely used credit cards (and hardly understood the concept) to one that’s so dependent on credit, we can’t imagine life without it. And that’s exactly where the credit card companies want us. They make a killing on how easy it is for us to swipe to get what we want.

Today, the total credit card balance in America has reached a whopping $86 billion.4 Did you catch that? Eighty-six. Billion. Dollars. You know what this means, don’t you? It’s time to start living without credit cards!

americans with credit cards

How Credit Cards Work

These days, making a purchase is so easy—too easy. You don’t even have to pay . . . at least not right away. So, you buy a pair of shoes, maybe a hat, and a couple new rugs (because why not?). The world is at your fingertips!

That is, until you get your credit card bill. Now, you’ve got a $1,200 bill with a 19% interest rate. Oh, but you only have to make a $48 minimum payment. That’s easy enough, right?

Not so fast. You’ll need to make 33 minimum payments of $48 with a 19% interest rate—which adds up to $1,539.72—to eventually pay off that initial $1,200! Was the credit card worth it? Nope. Talk about stealing your joy!

That’s the danger of using credit cards. It’s death by a thousand cuts. Before you know it, you’re trapped with thousands of dollars in debt—all because you used money you didn’t have pay for something you couldn’t afford.

Clever Credit Card Marketing

So, how have credit card companies done it? How have they shaped our spending habits?

One word: marketing.

In the fourth quarter of 2021, Capital One spent nearly $1 billion to advertise their products.5 These guys know how to market, and they’re willing to spend insane amounts of money to do it. But here’s the crazier part: They wouldn’t spend that much money unless they knew it would make them even more money. And your wallet, my friend, is the return on their investment. Ouch.

You might recognize some of their tactics: 0% annual percentage rate, rewards, cash back incentives, travel miles . . . and the list goes on. And here’s the crazy thing: A 2021 Ramsey Solutions study found that 54% of Americans who have a credit card use it to earn rewards or cash back. But according to Bond Brand Loyalty, consumers are sitting on $100 billion in unredeemed loyalty points.6 That’s a lot of wasted money right there.

And here’s the biggest kicker: When you pay with a credit card, it doesn’t hurt as bad as it does when you pay with cash.7 Think about it. Isn’t it much easier to swipe a card than to pull out a $20 bill? You have to hand that cash over—and you don’t get it back. Compare that to a quick flip of the wrist. It’s so easy to use a credit card! And that’s why they’re so risky. Plus, when you pay with a credit card, you’re paying with “future” money. Money that you may or may not have next month.

Why not make life easier on yourself? Don’t buy anything unless you’ve got the money in hand (or in the bank). That way, you never have to dread getting another credit card bill. See? Living without credit cards is the way to go.

But What About My Credit Score?  

I hear it all the time: I only use a credit card to improve my credit scoreI will never be able to rent an apartment or get a house without a credit score.

Sound familiar? You’ve probably heard that the “almighty credit score” is just a way of life and that you can’t make it in life without a credit score. But that’s simply not true. I have never borrowed money in my entire life, so my credit score is “undetermined.” It’s amazing, you guys! When you have cash in the bank, you’re not tied down by these myths that just keep you in debt. And that’s what I want for you—to live the life you want without obsessing over a silly credit score.

Let’s go over the myths floating around about credit scores so you can see that living without credit cards is really possible:

Myth 1:

A high credit score is a sign you’re winning with money.

Nope. Your credit score—maybe you’ve heard it called a FICO score—tells you one thing: You’ve gone into debt. Sure, you pay your credit card bill on time, but you’re in debt. You could literally become a millionaire today, and it would not change your credit score one bit. The best indication that you’re winning with money is your bank account, not a high credit score

Myth 2:

You need a credit score to rent an apartment.

This one’s not true either. If you have your first and last month’s rent plus a security deposit, most apartment complexes will work with you. You might have to try two or three, but they’re definitely out there.

George Kamel talks about this in Episode 7 of The Fine Print. Start listening around the 18:33 mark and see for yourself!

Myth 3:

Keeping a credit score to get low rates on car insurance is a smart move.

It’s true that no credit score or a bad credit score will drive up rates on your car insurance. But you’ll more than make up for it with all the money you’ll save by not paying interest to a bank to build your score.

I always tell people to ditch the credit cards and go with a debit card. Since it’s linked directly to your bank account, you have instant accountability on how much you spend. Plus, that “swipe” isn’t quite as easy as it is with a credit card since you can only spend what you have.

Still not convinced that credit cards are a bad idea? Let me get real with you for a minute.

credit score myths

Love Your Life Without Credit Cards

I was blessed to figure out what I wanted to do with my life at an early age. Since I was a kid, my passion has revolved around the financial principles my parents taught me. And they have served me well ever since.

When I was 15, I started traveling with my dad and speaking at some of his live events. One of the comments I heard all the time and still hear today is, “I wish I had known this when I was younger!”

That phrase has stuck with me ever since, and it really struck a chord when I first went off to college. Credit card salesmen seem to pop up everywhere on college campuses. Why? Because college students don’t know how dangerous credit cards and debt can be. Flash the word free at any poor college student, and you’ve got a new card-carrying member of the credit club. And that’s exactly what happened to my friend in college.

I shared a longer version of this story in Smart Money Smart Kids, but it’s worth sharing again here:

One night, my friends and I decided to visit the local burrito restaurant for dinner. And there, set up at the entrance, was a credit card jockey. He asked if we wanted a free dinner. (Are you kidding? A bunch of poor college students? Yes!) But then he gave us the bait and switch. We could get a free dinner if we signed up for a credit card right then and there. I grew up hearing how dangerous credit cards were, so I kept on walking. But my friend didn’t. And two minutes later, she was all signed up.

When I asked her why she did that, she said, “Oh, Rachel, it’s no big deal. When it comes in the mail, I’ll probably just cut it up. And if I end up keeping it, I’ll use it just for emergencies.” But that definitely didn’t happen. A few “emergencies” later, and she was in the deep end of credit card debt and in full-blown panic mode.

Every time I hear someone talk about being debt-free, I see so much more for them than just a life without payments. I also see opportunity.

I see opportunities for them to take a portion of their paycheck and, instead of sending it to MasterCard or Sallie Mae, they write a check to help build an orphanage in Africa or help an underprivileged family at their local church.

I see someone who can now begin building their kids’ college funds instead of sending monthly car payments to the bank.

I see someone who’s changing their family tree forever.

Think about what you could do if you didn’t have debt or if you weren’t relying on a credit card to fund your life. Imagine how cool that would be to live like no one else so you can live and give like no one else!

So, let’s get down to the nitty-gritty.

Living Without Credit Cards

Turns out, personal finance is 80% behavior and only 20% head knowledge. And for all of you who don’t have a finance degree, that’s great news. It means that living without credit cards is really possible. But here’s the thing: You have to start by changing your behavior with money (or what I like to call your money habits.)

Here’s what you can do to start loving your life without credit cards:

1. Stop spending with credit.

If your favorite way to spend has been with plastic, this one might be hard. But remember: Credit (aka debt) isn’t your friend! Cut that card up, pay off the balance, and close the account once and for all.

2. Get on a budget.

If you didn’t know, I love budgets. And no, not because I’m Dave Ramsey’s daughter. It’s because it gives me freedom to spend (and I love spending just as much). EveryDollar is the perfect tool to help you get started. And better yet—it’s free! Download the app and start setting up your first budget right now.

3. Live on less than you make.

Ditching credit cards is really just about making a stand—deciding that you’re not going to “buy” what you can’t pay for, and that debit cards and cash are the only way to pay. After that, it’s just about making practical decisions every day to form real behavior change.

how to live without credit

Are you ready to start living without credit cards? You might be a little nervous to take the plunge, but trust me: It’ll be the best financial decision you ever make. But you don’t have to do it alone. In fact, almost 10 million people have taken control of their money with Financial Peace University (only available in Ramsey+), and you can too.

This nine-lesson course will teach you how to save money, dump debt, and save for the future. And when you sign up for your free trial of Ramsey+, you’ll get Financial Peace University, the premium version of EveryDollar, and loads of free content (including access to my course Know Yourself, Know Your Money) to help you build better habits with money.

Ready to get started? Start your trial here.

Rachel Cruze

About the author

Rachel Cruze

Rachel Cruze is a two-time #1 national bestselling author, financial expert and host of The Rachel Cruze Show. She has appeared on Good Morning America, Today and Live With Kelly & Ryan, among others. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people how to avoid debt, save money, budget and win with money at any stage in life. Learn More.

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