Lynnae McCoy is a freelance writer, homeschooling mom, and frugal living enthusiast. She writes about frugal living at Being Frugal.net and about balancing work and homeschooling at Freelance Homeschool Mom. When she has a rare spare moment, you can find her on Twitter.
Almost two years ago, I got rid of my credit cards. Though it’s not a decision I recommend for everyone, it’s working out well for my family. When people find out that we don’t use credit cards, though, there are always a few questions. Is it possible to live without credit cards? Here are answers to some of the biggest concerns people have, when it comes to giving up the cards.
Purchase and Fraud Protection
The first argument against using debit cards instead of credit cards is the supposed lack of fraud protection. That’s not entirely true. If you use a Visa branded debit card as a credit transaction (meaning you don’t enter your PIN number), you are covered under Visa’s Zero Liability Policy.
The disadvantage of using a debit card is that you’re already out the money if you have a dispute, and you will need to wait until the situation is resolved before you get your money back. Still, if you aren’t living on the financial edge, it’s probably not a big enough reason to necessitate the use of credit cards.
Shopping on the Internet
A second reason people don’t want to give up credit cards is concern about lack of security, when making internet purchases. Fortunately, there are ways to protect yourself while using a debit card.
What I did, with the advice from my bank, was open a second checking account that comes with a debit card. I keep very little money in this account. When I want to make an online purchase, I transfer money into this second account and make my purchase. If something were to go wrong, the damage would only affect the small checking account, not my main account.
Renting Cars and Hotel Rooms
If you travel a lot, it probably makes sense to keep a credit card. But if you only rent hotel rooms or cars every once in a blue moon, that’s not enough reason to carry a credit card, if you’d rather give them up.
I’ve never had a problem renting a hotel room with a debit card. When checking in, hotels usually block the funds necessary to pay for the duration of your stay. This simply means they put a hold on these funds, making them unavailable for your use.
Car rental companies work in much the same way, though they usually add a significant amount to the block, sometimes $500 or more.
Whether you’re renting a hotel room or a car, calling ahead to ask how much of your money they will block is a good idea. Again, if you have extra money to handle the block, using a debit card is not a big deal.
Your Credit Score
If you don’t use credit cards, will your credit score be affected? Maybe. If you have other types of installment loans, such as a mortgage or car loan, you could maintain a good credit score without owning credit cards.
However, if you have no debt whatsoever, your credit score might take a hit. But if you have no debt, you may not care.
It is possible to live a credit card free life. It’s easier if you aren’t living paycheck to paycheck, you should easily be able to transition to life without credit cards. Just be aware of the above scenarios, and you’ll be just fine.
