And give up credit cards forever?
Like many Americans, I use credit cards for most of my purchases. Credit cards are a helpful financial tool for me because of these benefits:
- Reward points (I use mine to get Sephora gift cards)
- Ease of online banking / record of purchases
- Fraud protection, especially in large / online purchases
However, with the new consumer protection bill passed in May, will credit cards become less attractive to consumers?
Right now, no-fee cards are common, especially for consumers with solid credit background. But if credit cards start charging an annual fee, I would definitely reconsider my decision to use credit cards. After all, every time I use my card, the merchant will pay 1%-2% of the total purchase price to a credit card company. Even though I don’t carry a balance, credit card companies still make money off of my card use.
I may have to live with reduced rewards points (although I hope not!), but my selfish hope is that credit card companies continue to offer no fee cards for consumers. Although a credit card-free existence works for some bloggers (Brad of Enemy of Debt, for example), giving up credit cards for good will be very difficult for me. I hate carrying cash – it is unhygienic, difficult to keep track of, and easy to lose. I don’t think I’ve had any cash in my wallet for over a month.
Can you / do you live on an all-cash system? Can you give up credit cards for good?
***I’m mentioned in the Carnival of Personal Finance #233 hosted by A Gai Shan Life.
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My experience is tainted by the fact that I got into major credit card trouble two years ago. I had opened three cards, hoping to build my credit for the future. But those three cards soon multiplied to six cards, all charged to the limit and two of which – store cards – I couldn't pay the minimum balance on.
Since then, I've cut my credit cards down to only one – a Chase card with a 29.99 percent APR. It's my oldest card, and the only one I never made a late payment on so I wanted to keep it for credit score reasons. I only use it for emergencies (haven't had one that warranted using a credit card yet). I'm terrified of relapsing into my former bad judgment with credit cards, so I restrict myself to debit card and cash only. I try to use cash more than anything because I don't keep track of my debit card usage as much as I should. Using cash means I only have to keep up with one transaction on my bank statement – ATM withdrawals.
If you're someone who can be responsible with your credit cards – as you clearly are – then I say go ahead! Use it! But if you're someone who is tempted to use a credit card like it's free money – like I did – then I think it's worth it to use cash only.
You wouldn't use your eftpos card (er, not sure what you guys call it – cards that draw from your checking account)?
Unfortunately, my card charges an annual fee (if anyone knows of a fee free card available in NZ holler!) but I still use it as much as possible for rewards and online purchases.
Also, I never thought of cash being unhygenic, but I guess you're right
I think debit cards would be the equivalent of eftpos cards. I almost never use my debit cards because I feel that credit cards offer more protection (especially for online purchases).
I didn't know that NZ has so few no-fee cards… makes me wonder if this might be where the US is heading. I hope not!
I haven't had a choice but to give up my credit cards. I got in way over my head about six years ago; then the restaurant I was working at started going downhill and I was fired from my next job. I'm still trying to pay those things off. I tried for a while to keep a couple open, but it was just too easy to use them. I don't have a single one open now, not even a store credit. Once I get these paid off, I'll probably get one or two more simply for the credit building aspect–but I'll most likely cut the physical cards in half so I can't go out to dinner on them.
I've never gotten into trouble with credit cards .. ever.
So when I collect points for paying by credit card (and clearing it immediately when I make a purchase), it's win win for me.
I've used about $920 of free points towards groceries so far
First of all, love the new site design. Couldn't help with the Favicon, but I hope you get it! Second of all, I think I would probably stop using Credit Cards all together if there was an annual fee. Isn't that one of the widely promoted pros of getting a credit card – not having an annual fee? I like my cash back rewards and additional discounts in department stores. If they take that away, they are going to lose my business!
We only use our credit card for gas, because we both use our cars extensively for work and get paid mileage. It was a nightmare trying to float the cash and then re-work the mileage into our budget properly. Otherwise, we use cash for everything, and it has been fantastic for our budget. It took a bit of adjustment, as I used to be like you, and didn't carry any cash on me, but now I'm used to it and prefer it. I still don't carry a lot (except on grocery day) but that keeps me from making mindless little purchases that add up over time.
i got into trouble with credit cards when i was younger too! thousands of dollars in credit card ebt but ive finally put that under control… my credit card doesn't have an annual fee and i get cash back. it's a pretty sweet deal. i'll be miffed if that changes…
I've been reading about the possible (and likely) return of annual fees and what not on credit cards, I have thought about what would happen if I'd have to cancel the ones I have. It would hurt my credit score, but I'm not paying annually for things I don't use.
Could I make it on all cash? As of today, nope.
One thing I know is that I am not so great at keeping track of cash. When I get cash out of the ATM, I can only account for 70% – 80% of the what I took out. And sometimes it's quarters and stuff I stick in parking meter — no receipts, means cash black hole. I don't know where the money went.
Also, even though I have a large cash cushion, my checking account is paycheck to paycheck. I'd run out of cash between paychecks if i only used what was in my checking account. I don't want to keep large amount of cash in there. I'd rather put in where it builds interests or invest it. Annual fees and big APRs will make that harder.
Boo. We're all suffering for those who didn't use their credit wisely (and once upon a time, I was one of those people!).
The only cash I can hold on to are $20 bills. For some reason, if the bills are smaller, I am more likely to spend them. But if I have a $20 I feel like I don't want to "break it".
I like my credit cards and ever since I morphed from a spender into a saver, I don't get into trouble with them. It's been an expensive year, but at least I've gotten a little back in terms of rewards, about $1000 so far. I would only move to an all-cash system if it made economic sense, but right now it doesn't.
I COULD use only cash but like you, I don't want to. I like the fact that if I pay $500 for a TV (random example), I get an extended warranty from my credit card. I can also dispute charges if a vendor doesn't provide services as promised. With cash, you're just out of luck. Not to mention, I get lots of FF miles from my credit card which helps to subsidize my travel.
This might sound silly but I don't care too much for those rewards. I have a few credit cards and store cards that I don't really use (just for credit score purposes). I use my debit card 99% of the time. Cash? Only when I need quarters to do my laundry
Or for valet parking.
I didn't know PayPal had that feature – very nifty. Thanks for sharing.
If I had to live on a cash only basis, it would drive me crazy. I like that I can earn 2% on all my spending by using my credit card and then pay off the balance in full. I'm too scared I would lose cash and/or it would be stolen and I have no recourse.
I agree that cash is just nasty! I don't even like to think of the number of hands that have been on that money.
Do you like to think of where the hands of the skeezy drive-thru cashier have been before they grab your card and hand it back to you?
I've been on only cash for a while now. For online purchases I use the Paypal plugin which generates a one-time-only secured credit card number (Mastercard) and that hits my paypal account – once.
Living in countries where most places I go take just cash has helped me a lot.
I don't have an all CASH system, but I do have a no-credit card system. I use my debit card for most purchases (except the occasional lunch out or trip to the farmers market) because I like being able to keep track of purchases, and it's just easier…much in the same ways that a credit card is easier. I don't earn any reward points, and I'd like to, but so far, the benefits of not having a credit card (no risk of accumulating debt, no scary fees, etc) outweigh the good of having one (for me, rewards points, since I wouldn't use it to buy things I couldn't pay for all at once).
I am intimidated by the thought of getting a credit card, and my no-card system works for me!
See the thing I like about having cash, besides the fact that Euros are so pretty
, is that I take a set amount every week or month (I actually set a budget for myself), and that's that.
Debit cards are great if you have a hard time keeping track of purchases (and I still have a debit card because hey – sometimes you have to have one)
But having a set amount of cash on hand really opens your eyes to how quickly things add up.
Bills of course, I pay online from my Italian bank account. (but I consider that, and debit cards, to be basically the same thing as "cash" since it's "not a credit card"
I would prefer to live on an all cash system because unlike you, I don't pay my balances in full at the end of the month. Which means at some point I was spending more than I was making). That's not the case now, but it was and I'm paying for it.
So, if I could only use cash, it'd be phenomenal. If you don't have noney, you can't buy goods. That would be great.
I think I could do all cash. I'll know for sure if my one credit card begins to charge me an annual fee and I can't find another one on the open market with no fee AND offer rewards.
I don't have an ALL cash system but I do have a debt card one. I haven't used a credit card in 2 years and don't plan on going back. My debt card though it has no rewards keeps me from getting an extra bill in the mail, comes with no fee's and offers the exact same protection a credit card would. I have lost my card a bunch of times and the one time is was actually stolen the bank refunded all the money in less than 48 hours. I get excited opening my mail box because there are no bills i it!! lol