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The Downsides of Not Having a Credit Card

living without credit cards

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Ever since Diner’s Club Inc. introduced the first international card in the 1950s, these little rectangular plastic cards have grown to acquire various titles. Some say that credit cards are necessary evils, little devils that bring such convenience in our lives but can be the onset of the march to the debt graveyard.

However, few people can stand the misery of living without credit cards. Americans’ willingness to pay for convenience is backed by data from the American Banking Association as cited by creditcards.com. According to the report, there were 364 million open credit card accounts in the US as at the close of 2017.

That’s higher than the entire population of the US, including the minors!

In the 1960s’ and 1970s’ people used credit cards as luxury products. People rarely took credit card “loans” as they do presently.

However, soon after the recession of the early 1980’s buoyed by lowering inflation, credit card debt began soaring. Credit cards gradually moved from being convenience products to essential products.

Today, credit cards are no longer luxury items. You need a credit card to establish a credit rating; you need a credit card to book a flight, to reserve a hotel room, to rent a car, to buy products off the phone or on the internet. In fact, without a credit card, life today would be as miserable as a frost-bitten apple.

Forget the myth that once you ditch your credit card you’ll be better off. In fact, choosing to live without credit cards is giving up your financial freedom. Here are the downsides of not having a credit card.

A Credit Card Makes You a More Responsible Citizen

First things first, owning a credit card causes you to develop certain responsibilities that could not be entrusted to you previously.

The primary responsibility of owning a credit card is fulfilling your obligation to make on-time payments and stay within the preset limits. Flouting these responsibilities is what causes credit card debt misery.

It’s not the devil in the card; it’s the devil in you that causes misery.

Just as you would improve your behaviors on the road to avoid losing your license, you can master responsible spending and borrowing to avoid excessive credit card debt.

You Lose Out on Establishing Your Credit Rating

Do you know your credit score? You can check out Freescore360 and know what your score is. One of the fastest and easiest ways to build a good credit history which you direly need is through credit cards.

First, you can apply for a credit card even without previous loan history. For example, if you are just from college and you’ve just started out on a new job, no bank would be willing to give you a loan to help in the transition, at least not yet. However, there are credit card providers who specialize in these groups of people, perceived as “higher risk.” They offer a way for them to start establishing a good credit history.

In addition, don’t listen to the folly that you can get a loan or mortgage without a credit card. Look closely at those who claim to have such facilities. Chances are that they chose to live without credit cards way after they got their first car loans or had their mortgages.

The truth is no bank will give you any loan without a good credit history. In fact, bad credit history is sometimes considered even better than no credit history. Just remember to keep the first tenet, responsible spending and on time payment.

Travel is a Misery Without Credit Cards

As we mentioned in the opening, credit cards have migrated from being luxuries to essential products. In fact, credit cards are so essential for traveling that you just can’t travel comfortably without one.

You can’t make reservations for a hotel room without a credit card, you can’t reserve a flight ticket without a credit card and you can’t rent a car without a credit card. Choosing to live without credit cards is just opting for misery.

There are those who claim that they can do all these things, it just takes a little more effort. But they are wrong. It’s just miserable.

Think about it, a hotel would require a cash deposit to make the reservation. Who has time for that? Worse still, after you check out, they would still place a hold on your account just in case you damaged anything in the room. Also, renting a car without a credit card is hell. Therefore, you’ll need to drive around in a reliable set of wheels. However, such a car doesn’t come cheap, and you’ll probably need a loan to get it. But first, you need an excellent credit rating for the car loan which you threw off when you chose to live without credit cards.

On the other hand, travel with credit cards is simple and flawless. And if you are having a hard time finding an affordable place to spend the night, check out VRBO.

Fraud Amounts to More Inconveniences Without a Credit Card

You don’t see people living without credit cards walking around with wads of cash for payments. Instead many use debit cards.

By all means, carrying around a lot of cash is risky, so avoid it. If you lose it, it’s gone for good. However, card fraud also affects those who choose to make payments using cards. Some say that credit card fraud is more prevalent than debit card fraud. But that’s not true. Credit card fraud seems so rampant because more people in the US use credit cards to make payments that debit cards.

On the contrary, the risk of fraud, whether you use a credit card or a debit card is the same.

However, you’ll go through more misery when your debit card is compromised as compared to what you’ll experience with a compromised credit card. This happens because the bank won’t extend to you a “soft loan” to cover for the amount hived off by fraudsters while they investigate debit card fraud. You’ll have to wait for weeks, without cash, before they refund your account.

In the meantime, you become a mooch because you are living without a credit card.

Living Without Credit Cards Curtails Your Financial Flexibility

Think about it, the expression living paycheck to paycheck is almost synonymous with American workers. You’ll continue to live that way if you are living without credit cards.

Credit cards free you up from the paycheck to paycheck shackles allowing you to borrow, spend and pay back when the paycheck checks in. That way, you can take advantage of sales promotions or major discounts.

If you are worried about developing an uncontrollable urge to shop because of the credit card, remember the first tenet, be a responsible citizen and control your urge to spend. But, we often fall prey to the sales offers retailers splash in our faces. If that’s you can get great deals using coupons from coupons.com and reduce your spend.

But remember, if you are living without credit cards, you’ll be miserable whenever you are low on cash. But a credit card makes your financial life more flexible.

Payment Protection is a Far Away Dream

Section 75 of the Consumer Credit Act provides a wonderful benefit to credit card holders.

If you’re living without credit cards and make a purchase that goes awry, your best bet at getting a refund is making a complaint against the seller. If your complaint is not compelling enough, you’ll end up miserably short. However, if you made the purchase using a credit card and the vendor refuses to make a refund, the Act gives you a leeway to request a refund from the credit card company.

How cool is that!

This is especially helpful when you make payments for a flight and the airline suddenly becomes busy before you are due to depart.

You’ll Miss Out on the Rewards Schemes

Some cards offer cash back, some offer points that you can redeem on flights or free hotel bookings. Regardless of what they offer, living without credit cards means you miss out on all that.

Also, there is the possibility of using such schemes to save some cash. A free air ticket or hotel room would save you loads of cash when you can incorporate it with your regular schedule.

All major credit card companies in America offer a multitude of rewards for the usage which enhances the value of credit cards.

Lastly, Expenses Tracking Without Credit Cards is a Nightmare

You’ll have to be a very prudent bookkeeper to record every cash transaction when you are living without credit cards. At the end of the day, you’ll also need to do the extra work of uploading the details of your transactions on a spreadsheet to track your expenses.

However, credit card companies provide their clients with statements that show the amounts charged, details of expenditure and any other charges on your card. For the prudent credit card user, the statement is a comprehensive financial record which is key for other processes such as budgeting and expenditure control.

If you are prudent about your personal finances, living without credit cards is not an option.

Living without credit cards is often fronted as a panacea for spiraling credit card debt. However, as you have read, it’s a choice into misery. The credit card is indeed a cornerstone of our daily lives.


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