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6 Tips for Living without Credit Cards

The number of Americans who use credit cards has fallen to an all-time low, according to a recent Gallup poll, with about one-third going plastic free. And there may be a generational shift occurring, since nearly two-thirds of Millennials don’t have credit cards, based on data from Bankrate and Princeton Survey Research Associates International. So how can you join them in living without the plastic?  

  1. Commit to a budget. Add up your monthly income, subtract your regular necessities—such as housing costs, utilities, transportation, groceries and savings—and determine what’s left. Decide how you want to spend that extra amount and don’t spend any more.  
  2. Take the plastic out of your wallet. Cut up your cards and resolve not to use them. If you need a convenient way to make purchases without using cash, rely on traditional or prepaid debit cards.  
  3. Pay off your outstanding balances. That will help you eliminate all the interest you’re paying on debt, adding more money into your monthly budget. And when you close those accounts as they are paid off, it will be easier to avoid the temptation to charge more. 
  4. Save for expected needs. Whether it’s holiday spending or a summer vacation, estimate the costs and begin setting aside money in a savings account ahead of time.  
  5. Get creative. Not sure you’ll be able to secure a hotel or other reservation without a credit card? Many will accept debit cards that have a MasterCard or Visa logo or a payment made through a site like PayPal. They might even take cash! Call ahead to find out the company’s policy.
  6. Manage the cards you keep. It’s true that having—and using—a credit card helps you establish and maintain a good credit rating. With that in mind, consider keeping one card that you treat like a debit card. Use it exclusively to buy things you know you can pay off at the end of each month. Your good credit score can make it easier to obtain credit and to qualify for a lower interest rate.