How To Survive And Thrive Without A Credit Card (2024)

Credit cards can cloud your perspective of how much money you have with their postponed payments and grace periods. Living without credit cards may make budgeting easier. Budgeting can help you ensure you’re intentional about where you spend your money and puts you in control.

Credit cards can tempt you to spend money you don’t have yet, since charges aren’t due until the end of your next billing period. When you live without credit cards, however, having a budget and sticking to it is more than a strategy—it’s a necessity to avoid overdrafting your account or running out of cash. Make sure to track your sending to ensure you’re on target and to keep an eye on any rising costs.

There are lots of great budgeting apps available for free or for a small monthly charge.

For many, the appeal of credit cards is that you can earn points, miles or cash back based on your spending. Effectively, you’re getting a discount on everything you charge.

But you don’t need a credit card to get rewards. These days, all sorts of companies from airlines and hotels to Designer Shoe Warehouse (DSW) offer loyalty programs to their frequent shoppers. The DSW VIP program gives you points on every purchase made, a $5 discount on your birthday, and free shipping and points for donating a pair of your kicks to the Soles4Souls charity.

Sites like Rakuten or CapitalOneShopping.com offer cash back for your online shopping. To streamline the rewards you can add Rakuten or CapitalOneShopping to your browser to earn extra rewards when shopping online.

JetBlue Airways’ TrueBlue, ranked one of the best frequent flyer programs, helps JetBlue customers earn miles without a credit card. By purchasing flights on jetblue.com, you can earn one Mosaic tile for every $100 spent on a qualifying flight. Those tiles can earn you status with free perks like priority boarding, free checked bags, in-flight drinks and same-day flight changes. Inquire about loyalty programs wherever you shop the most.

Meanwhile, rewards tied to debit cards—those cards linked directly to your bank account—are also spreading. This is a reversal of what happened after 2010, when Congress required that banks charge merchants a lower swipe fee to cover bank services such as authorization, clearance, fraud protection and settlement. The change was intended to help lower retail prices, but it caused some banks to nix their debit card rewards. Since the provision only applied to debit cards, banks decided to move their bonus features to the credit realm.

But with Millennials wary of piling credit card debt on top of their student loans, and online banks becoming more competitive, debit card rewards have started spreading again.

Major card issuers like Discover, American Express and Bank of America offer debit cards with cash-back programs. You may only be familiar with Discover and American Express as credit card providers, but they’ve branched out into the banking services, as well.

A credit card-less lifestyle goes against the mainstream, so it can take some planning. That’s particularly true when it comes to travel. Renting a car or reserving a hotel room has traditionally required a credit card since these services put a hold on your account. But increasingly, service providers have been willing to take a debit card instead.

When using a debit card make sure that you have two forms of valid ID—one should be a driver’s license—and enough money in your account for any costs that you might rack up. Warning: A car rental company may place a hold against your account of up to $500 as a deposit in addition to the estimated rental charges. So your hold could easily total $700 or more. Some car rental companies will not accept debit cards for renters under 25 and some locations will not accept debit cards for rental holds.

If you don’t want to be tempted to spend money you don’t have, or can’t qualify for a regular credit card, consider opening a secured credit card. A secured card works like a regular credit card but requires you to place a security deposit matching your credit limit.

When you use the secured card, you’re still required to make a monthly payment—it’s not deducted from your deposit. Timely payment on a secured card usage can build up your credit history and raise your credit score. As with other cards, the amount that’s charged as a hold against your account won’t be available to you.

Read more: Best Credits for Bad Credit of 2024

If your card-less life is a choice, consider cutting up your existing cards or hiding them without closing the accounts. Your open credit card accounts demonstrate credit history, a key factor credit reporting bureaus use to calculate your credit score. As long as a card is open, it’s part of your history. But if you cancel a card that you’ve dutifully paid on time for several years, your credit age will drop.

In addition, closing a credit card could affect your credit utilization ratio. That’s the ratio of your outstanding balances to total credit. A low utilization ratio has a positive effect on your credit score while a high ratio can be a negative. If you have a $5,000 credit limit and you owe a total of $1,000, your ratio is low at 20% ($1,000 / $5,000). However, if you close a card with a limit of $3,000 and you still owe $1,000, that increases your ratio to a not-so-hot 50% ($1,000/$2,000).

Some people use their credit cards once a year or charge a single monthly bill then pay their balance in full. This helps keep your payment history in good standing but also prevents the bank from closing their account due to inactivity. Others rely on installment credit like student or auto loans to help build their credit score.

Read more: A 60-Second Guide To Credit Utilization

Prepaid cards allow you to load money onto a card and spend the amount you set aside. Most prepaid cards don’t require a bank account, making them a versatile option for non-residents and those without a bank. The right prepaid card can be an excellent option for purchases that don’t accept cash, but you’ll want to be aware of the fees.

Not all prepaid cards are created equally. Some cards may charge monthly service fees, inactivity fees, cash reloading fees or a fee per purchase. You may also be charged to call customer service or to check your balance at an ATM. Make sure you understand the possible fees and choose a card that minimizes fees for your spending habits.

If you shop online, you’ve probably been overwhelmed with the variety of buy now pay later (BNPL) products on the market—Afterpay, Klarna, Affirm, Sezzle or Zip. BNPL offers a short-term installment loan that allows you to split the payment for a purchase into installments. A common repayment plan is four payments due every two weeks.

Using BNPL can be an easy way to make purchases online with no interest, but requires some serious caution and organization. Unlike credit cards, which have a single due date, each time you make a BNPL purchase, you create four separate payment due dates, usually based on the date of your purchase. That means if you make three BNPL purchases in a month, you have generated 12 payment due dates. The complexity can be compounded if you purchase through multiple BNPL providers.

While this product promises interest-free payments, there are significant late fees (that’s what they’re counting on), and BNPL services don’t come with the same consumer protections as credit cards. If you choose to return merchandise bought through BNPL, you may be obligated to complete the payments while the dispute is resolved. There’s a reason this option is last on the list. But if you use this option sparingly and set up automatic payments, it can be a great choice for the right user.