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How to Survive and Thrive 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 an all-inclusive vacation to Mexico? Done. New set of luggage and some swimsuits for that Mexico vacation? Done!

Swiping a credit card (or using it to shop online) has become an everyday part of our culture. But you know what else has? Credit card debt. In fact, the national credit card debt is currently at $986 billion.1 That’s the highest it’s ever been!

But guess what? There’s a foolproof way to avoid credit card debt. It’s called not having a credit card. Yep, you read that right. Living without credit cards is not only possible—it’s also the better choice!

Don’t believe me? I’m going to show you how you can survive (and thrive!) without credit cards.

Can You Live Without Credit Cards?

Did you know credit cards haven’t even been around that long?

In 1950, the first multi-purpose credit card was created. As the story goes, Frank McNamara realized he’d forgotten his wallet while at dinner in New York City. Poor Frank’s wife had to come pay the tab, and he was so embarrassed 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.2

It didn’t take Americans long to love the idea of credit. Within the first year, Diners Club had 42,000 users.3 Fast-forward to today, and Ramsey Solutions research found that 8 in 10 Americans have a credit card. And among those with a card, 4 in 10 are carrying a balance and racking up interest. Ouch.

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.

Listen, 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 don’t have a single credit card. I’ve actually never had a credit card. Why? Because credit cards make it super easy to go into debt.

Here’s the deal: You don’t need a credit card—no matter what your parents or high school economics teacher told you. But I can already hear some of you asking, “What about . . ?” So, let’s go ahead and quickly address the most common objections to not having a credit card.

How Do You Buy Things Online Without a Credit Card?

Two words: debit card. You can use a debit card anywhere you can use a credit card, including online. But the danger with credit cards is you don’t feel like you’re spending money—so you’re more likely to spend more.4

You might as well be paying with Monopoly money when you use a credit card, especially if you’re on a late-night retail therapy spiral (trust me, that Dyson Airwrap isn’t going to solve all your problems). On the other hand, when you use a debit card, you immediately see that purchase come out of your bank account. You feel the pain of spending more, so you’re less likely to overspend.

How Do You Cover an Emergency Without a Credit Card?

You use your emergency fund. And no, a credit card doesn’t count. You need actual money set aside in your savings you can use for those unexpected moments. Because charging an emergency to your credit card doesn’t solve your problem—it just makes it ten times worse.

debit car icon

Don’t let credit control your life! Learn the proven plan to win with money.

And when you lose your job or have an emergency surgery, the last thing you want to worry about is how you’ll financially recover. Having enough cash piled away helps you handle life’s curve balls and gives you so much peace of mind. So, no—you don’t need a credit card “just in case of emergencies” when you’ve got a solid emergency fund in place.

How Do You Travel Without a Credit Card?

Again, a debit card will get you everywhere you want to go—except into debt. Traveling without a credit card is totally possible! You can buy a flight, rent a car, and book a hotel room all with your debit card. Will you have to jump through a few extra hoops? Maybe. But my debit card has never stopped me from traveling. And as long as you budget for your trips, you’ll be good to go!

Aren’t Credit Cards Safer Than Debit Cards?

Not necessarily. Did you know that if you have a debit card backed by a major credit company like Visa or Mastercard, you have the exact same protections as a credit card?5,6 And as long as you’re checking your bank account (which you should do often), you can report any fraudulent charges to your bank and get your money back ASAP. Plus, a debit card won’t put you in debt or charge you ridiculous fees. So, overall, a debit card is better than a credit card.

What About My Credit Score?  

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

Maybe you’ve been told your quality of life is only as good as your FICO score or that you can’t make it without one. But that’s simply not true! The truth is, you can live without a credit score. I know this because I have never borrowed money in my entire life, so my credit score is undetermined. And it’s never held me back! You can even buy a house without a credit score.

It’s amazing, you guys! When you have cash in the bank and you’re managing your money wisely, you’re not tied down by these myths designed to keep you in debt. And that’s what I want for you—to live the life you want without obsessing over a silly number system the credit industry literally made up.

How to Live Without Credit Cards

Okay, so I’ve shown you why you don’t need a credit card. But how do you actually live without one? Great question!

Here’s the deal: Finance is 80% behavior and only 20% head knowledge. That means if you want to live without a credit card, you need to change your behavior with money (aka your money habits).

That may seem overwhelming, but I’ve broken it down into steps to help you get started.

1. Stop using credit cards—and credit.

First things first. Get out your heavy-duty scissors and cut up your credit cards (yes, I’m serious).

This might be the hardest part for some of you—especially if your relationship with your Amex is the longest relationship you’ve ever had. But breaking up with your credit cards means you’re deciding to take control of your money. So, cut those cards up.

But don’t stop there! Use this moment to swear off all credit once and for all. Because credit (aka debt) isn’t your friend! And only cutting credit cards out of your life won’t make a huge difference if you’re still messing around with other types of debt. The best choice you can make is to say bye bye to credit for good.

2. Figure out your financial situation.

Heads up: Your first month without credit cards can feel like a big change. If you’ve been relying on credit to pay your bills and cover most of your expenses, you may not even know what’s really going on with your money. So, now’s the time to figure it out.

Start by taking a look at your current financial situation. How much do you have in your checking account right now? In your savings? Also, do you know when all your bills are due? What about payments and subscriptions?

Make sure any automatic withdrawals you had tied to your credit cards are now connected to your debit card or bank account. And remember, since you’re done using credit cards, if you don’t have enough money in your account when the electric bill hits, it won’t get paid.

In fact, quitting credit cards cold turkey will probably throw some things out of whack—at least at first. And that’s okay! You just need to do some adjusting so you can move forward on the right foot . . . which leads me to the next habit.

3. Create a budget.

I love a budget. Because a budget gives me freedom to spend (and like I said, I love spending). 

A budget is extra important when you don’t use credit cards. Because you have to make sure you actually have the money to spend before you buy something. And instead of waiting on a credit card statement to tell you how you spent your paycheck the month before, you need to get in the habit of telling your money where to go before the month begins.

We all know what it’s like to get to the end of the month and ask, “Where’s all my money gone?” But a budget helps you plan for every expense, so you’re not caught off guard. Plus, you’re more likely to spend less money when you have a budget to stick to. Go ahead and set up your first budget for free with EveryDollar!

4. Only buy what you can afford.

Ditching credit cards means no more swiping and dealing with the payments later. You’re done with that! You’ve got a whole new outlook when it comes to money. From now on, you’re only going to buy what you can afford—i.e. what you can pay for in full and up front.

From here on out, debit cards and cash are the only way you pay for things. If it’s not in the budget, you can’t get it. That might sound harsh, but this is how you take control of your money—instead of letting your money control you. See, credit is all about “how much down?” but you really need to ask, “how much?”

Now, if you’ve made your budget for the month and you realize you don’t have enough money to cover everything, you need to do some adjusting. What expenses can you cut back on or cut out completely? Do you need to increase your income to make sure the basics are covered? Remember, you’re not reaching for the credit card anymore, so do what you can to live within your means.

Yeah, you’ll have to tell yourself “no” more than you like. And you’ll probably feel some serious FOMO when your coworkers go out for lunch for the third day in a row while you enjoy your homemade sandwich. But this kind of self-control will help you save more money and stay out of debt.

5. Save for emergencies.

Like I said, you don’t need a credit card for emergencies when you’ve got an emergency fund. But your car breaking down or an unplanned root canal can easily send you back down the credit card spiral. And we don’t want that!

Start by saving up $1,000 as fast as you can for your starter emergency fund. I know $1,000 won’t cover every emergency. That’s why you’ll eventually want to save up 3–6 months of expenses for a fully funded emergency fund. For now, though, $1,000 should be enough to get you by while you’re doing the next step.

6. Pay off credit card debt.

It’s hard to move on from credit cards when you’re still paying off the balances. (That’s like letting your ex mooch off your Hulu account after you’ve broken up.) And you can’t fully enjoy a life without credit cards with credit card debt weighing you down. So, it’s time to pay off your credit cards.

Now, the best way to get rid of your debt is with the debt snowball method. You list all your credit card balances from smallest to largest (not worrying about the interest rates). Pay minimum payments on all your debts but the smallest one. Throw as much money as you can at your smallest debt. When that first debt is gone, take what you were paying on it and put it toward the second-smallest debt, while still making minimum payments on the other debts. Keep doing that until all your debts are gone!

The debt snowball works because it’s all about motivation and momentum. It gives you small wins to help you attack your debt one step at a time. And listen, when you’ve stopped borrowing money and you’re sticking to your budget, you’ll knock out your remaining credit card debt faster than you think!

Why Life Is Better Without Credit Cards

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 when credit is no longer a part of your life, you’re free to live on your terms—not the credit card company’s. You have more opportunity to spend your money, time and energy on what matters most to you. And you can make way more progress toward your goals when you don’t have debt holding you back!

Living without credit cards also helps you learn contentment. Because instead of charging things you can’t afford to keep up with your neighbors or that one person on Instagram, you learn to be more grateful for what you already have.

Plus, there are plenty of other reasons why life is better without credit cards! Here’s what THE Ramsey Baby Steps Community has to say:

"I just get to enjoy my purchases, without having to dread the credit card bill at the end of the month and the extra interest!” — Shannon P.

“I spend (within my budget) without worry and then never have to think about it again. With credit cards, you’re always looking in the rearview mirror, hoping your choices don’t catch up to you.” — Christina J.

“I paid for a vacation in cash. Met a couple there who put the whole thing on credit cards and were worried how to pay it all off. Vacation feels different when you pay cash for it.” — Seth C.

“I no longer worship at the altar of the great FICO! I now work for building wealth for my family instead of to keep banks happy.” — Douglas D.

“We used to constantly juggle money to have enough to make the payments on time. I don’t miss the stress at all!” — Valerie J.

“I skip the hassle of paying for everything twice!” — Jenifer H.

“We have ZERO stress after vacations or Christmas! No paying for flights we already took, condos we already stayed in, food we already ate or gifts we already opened!” — Rachel R.

“I can’t spend money I don’t have.” — Cliff H.

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 the peace you’d feel and how cool it would be to live like no one else so you can live and give like no one else!

Ready to Start Living Without Credit Cards?

You might be a little nervous to make the change, but trust me: It’s worth it. And you don’t have to do it alone.

Millions of people have taken control of their money with Financial Peace University (FPU). Now it’s your turn! This nine-week course will teach you how to save money, dump debt, and save for the future—all without credit cards holding you back.

You can build better habits with your money. Start FPU today.

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Rachel Cruze

About the author

Rachel Cruze

Rachel Cruze is a #1 New York Times bestselling author, financial expert, host of The Rachel Cruze Show, and co-host of Smart Money Happy Hour. Rachel writes and speaks on personal finance, budgeting, investing and money trends. As a co-host of The Ramsey Show, America’s second-largest talk radio show, Rachel reaches millions of weekly listeners with her personal finance advice. She’s appeared on Good Morning America and Fox News and been featured in TIME, REAL SIMPLE and Women’s Health, among others. Through her shows, books, syndicated columns and speaking events, Rachel shares fun, practical ways to take control of your money and create a life you love. Learn More.

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