Rejecting Their Credit Cards: More People Choosing the Cash-Only Lifestyle

When Katie Simmons went cold turkey, it wasn't drugs, alcohol or cigarettes that she quit. It was credit cards.

"It was the hardest thing I had to do," says Simmons, who had run up $50,000 in credit card debt on any and everything. "I had no idea how much I relied on those darn cards. With those cards, I always had a plan B, now my plan B was gone."

The worst part of all that plastic usage: "I have nothing to show for it," she says.

For the last three years, she has been living the cash-only lifestyle, and with the help of CareOne Services, which offers debt counseling and debt management, in two and half years, she has paid off $25,000 of that $50,000 debt. "I realized that if I didn't do something, I would never be able to turn my debt around," says Simmons of Cornelius, N.C. "It was time to raise the white flag and get help or I would be paying off debt for the rest of my life."

Instead, she is starting to finally built up a little bit of a buffer and is saving. A funny thing happened on the way to saying no to credit cards. "I plan big purchases. Nine times out of 10 when I do have the money ready for the purchase, I usually don't buy it because I realize I don't need it," says Simmons. Somehow, she has been able to weather the unexpected, like medical issues with her dogs or car problems.

"I will never go back to credit cards," she says firmly.

Planning for Purchases Large and Small

Simmons is not alone. "There's a growing movement of people who are just stopping the use of plastic and not using services that require credit or debit cards," says David Spader, a financial analyst with "Everything is paid in cash or check, or not at all." According to a recent TransUnion study, 8 million Americans gave up using general purpose credit cards in the past year. Is America's love affair with credit cards starting to fade? For sure, some folks are just sick and tired of drowning in the bills.
Carole and Don Carroll didn't even remember to carry greenbacks until late in 2006, when they decided to go all-cash, "plain and simple to get out of debt." And they had plenty of debt -- some $88,000 worth. "Not for anything sexy like new clothes or new cars, but just trying to maintain our middle-class lifestyle when one of us lost a job, or whenever life would throw us a curve," says Carole. "We just kept up the best we could, but after awhile, due to the increases of interest charges and fees due to large balances and then late fees, it became simply a juggling act to pay the minimums and we were not able to approach the principle outstanding balances," she says. The Queens, N.Y., couple turned to GreenPath Debt Solutions, and in April of 2010 they finished paying off all their debt.

Going cash-only was an adjustment. "We had to know how much to carry to get through the day, how much we might need for dry cleaning or groceries. The biggest issue was that we needed to go to the bank more. The pre-planning aspect of it became less weird over time as we got accustomed to it. There is no downside to cash-only. The best up side is it allows you to keep yourself in check at all times, and hopefully never to fall into the 'pit' of owing money you cannot pay."

A Few Downsides to Quitting Credit

There are plenty of benefits to the cash-only life. "Studies show that people who pay with cash save approximately 20% over those who pay with credit and don't feel deprived," says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling. No debt equals no worries, less stress. "You learn to live within your means," adds Howard Dvorkin, founder of Consolidated Credit Counseling Services.

However, there are some drawbacks. Credit cards can be conveniently used to track how much and where you spend. Furthermore, says Dvorkin, because you're not using credit, you're not building a credit history, which can stop you from purchasing a car or house. No credit history means no credit report, which could negatively impact job opportunities with many employers who rely in part on credit reports when making hiring decisions, adds Cunningham.

But those may be small prices to pay for the financial freedom that can come with the cash-only life. To make the switch, plan for the transition by putting money aside in advance. This will get you started and help keep you from getting discouraged, says Cunningham. Also, create a budget and set goals to save money for short- and long-term goals.

Carole Carroll offers this advice,"The only way to give up credit cards is to simply do it -- kinda like smoking. You either do it, or you don't."

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I have closed my credit card accounts and have even taken it a step further by closing both of the bank accounts from two banks I was with. I have one small loan with a payoff of about $5000 and 4 years left on a car loan, after those two are paid off, I refuse to finance anything again. My credit score can go to zero for all I care, Whether they like it or not, I don't need banks or the credit bureaus.

May 23 2013 at 6:45 PM Report abuse rate up rate down Reply

Isn't it amazing to see how credit card companies, banks, employers, and others who are out to seperate you from your money are also out to destroy your good name the first time you get into trouble, even if it is thru no fault of your own? There are so many pitfalls within our economy that require that you do this or that if you want to live successfully. We have become a society of the herd mentality that requires that we have all this credit and debt in order to live sucessfully without regard to what happens when the rug gets pulled out from under you. What made this country great was how our grandparents and great grandparents did it. They worked hard and lived within their means and the country built itself on their backs, not on credit and easy money, but hard work and cash. We are now looking at the reality of our foolishness as it comes home to roost. Its time to go back and live like our grandparents and greatgrandparents lived and once again work and save and don't buy anything unless you have the money to pay for it. If everyone did that, the banks, businesses, and loan sharks would go back into the woodwork and start treating people with some respect instead of doing everything they could do to "leach" off the blood of hard working Americans. Everywhere you turn people are demanding that you give them your money and they do not care how they get it,, they just want it.. Beware and start working from your pocket instead of the plastic in your wallet. Make prices come down by lowering demand and expectations of those who are raking us over the coals.

June 11 2011 at 9:46 AM Report abuse rate up rate down Reply

I keep one credit card and use it sparingly with a cedit line of $ is the way to go!!! unless an emergency rears its ugly head.

April 25 2011 at 2:12 AM Report abuse rate up rate down Reply

Credit cards are like guns......they're fine in the right people's hands.

April 24 2011 at 8:51 PM Report abuse +2 rate up rate down Reply

Well there you go!!! This couple and others do not realize that what they have done by paying off their debt and not using the bank credit card will put the banks on notice that America is waking up. Their future fees and bank charges and their actions in total over the past 10 years have done much to devastate this economy. The consumer must be in partnership with the entity it is doing business with and win one seeks to become the "rule of banks" and perform actions which detrimentally affect the consumer - this is what you have. In fact, the refusal by many consumers will be somewhat comparable to what happens to a bank when deposits by those same consumers do not make their way to the banking facility. We need the banks and the banks need the consumer for its existence and profit making schemes - But I believe indirectly through a consumer wanting to limit their debt, this will greatly revive all Americans to know that they "must not heed to the whims of the financial services". Good faith and fair dealing have long lost their way with the assistance of the regulation passed in their favor - Thank you for this article. I may be off base here, but it is nice to know that some Americans are waking up.

April 24 2011 at 11:36 AM Report abuse rate up rate down Reply

I am divorced and my parents are deceased....and I keep credit cards in case of an emergency. I am on disability and have a low income, so a large car repair bill, a vet bill or even if I get sick or hurt can be way more than I can afford all at once. I sprained my ankle last summer and it was over $300 out of pocket between doctors, x-rays and physical therapy....which I only did a couple weeks because it was too expensive. I have a son and a granddaughter, they might need something. It makes me feel better knowing the credit cards are there.

April 23 2011 at 7:26 PM Report abuse rate up rate down Reply

I've been plastic free for 20 years and people think I'm odd I pay cash for everything but my house I paid cash for my F150 took alot of saving but it feels good to know it's mine

April 23 2011 at 6:14 PM Report abuse +5 rate up rate down Reply

this is nothing new here. I've been a cash shopper my whole life. The only credit card I ever had was a Macy's card, which I never used. Or if I did, it was only to get the percentage off my purchase, then I would pay it off right at the counter after my purchase. I'm 41 and I just didn't grow up like that. My parents never had a lot and they didn't use credit cards either. They said, if u can't afford to pay for it in cash, then u probably don't need it anyway. My friends thought I was weird. lmao. I was just never brought up that way. but recently decided to get a credit card to have for emergencies and I keep it put away, because I haven't had any emergencies yet. My son's don't have credit cards either. I said, you pay cash for it, or don't buy it. Or if they're short, I'll pay the difference to help. No problem. but I can see how hard it might be for people who have them and use them. I see all sorts of coach bags, airline discounts, whew, nice things. but I pass on them, unless i can pay cash. i did find a real coach bag in a thrift store, so there's my coach!! good luck. and I hope I don't catch the credit card bug....

April 23 2011 at 10:45 AM Report abuse +4 rate up rate down Reply

We got rid of our credit cards years ago and pay only cash or use a debit card. We have a savings plan and now if we need a large purchase of appliances, home repair, etc, we pay for it up front. Lots of retailers of this type will give you a cash discount if you write a check over using the debit card so they don't have to pay the fee. I refuse to pay the exhortionate interest on a credit card. As far as credit ratings, tough. I have no judgements and just a couple of car loans and mortgage as history. Frankly, that's all a nosy prospective employer needs to know. Besides, basing employment on something as risky and subjective as a credit history in these troubled times isn't a good indication of the habits of a prospective employee. With massive layoffs and unemployment, lots of us common folks are in trouble. Credit bureaus are just one stop up from politicians. Scum. If they make a mistake they are notorious for refusing to fix them. They won't even publicize the formulas by which they determine your credit score. They don't like the fact that I won't use credit cards, screw them.

April 23 2011 at 10:34 AM Report abuse +5 rate up rate down Reply
1 reply to Trish's comment

I totally agree with u!!!!! It bothers me how employers are using this to not hire people. In this economy, and with so many people being laid off, homeless, etc. how can they expect that these people should pay their visa bill instead of buying food or paying their mtg payment first. Not fair. Especially if they look back and see that things were being paid, up to a certain point then they went downhill after that. That truly bothers me that companies can get away with discriminating against people like this. if I owned a business I would never do that. I would do criminal background and other checks, but i would not hire them if they showed a recent history of paying then they stopped paying in order to live and survive. What will matter to me most is their past work history, criminal history. EXPERIENCE.

April 23 2011 at 10:50 AM Report abuse +2 rate up rate down Reply

To protest the high price of gasoline, NO ONE is to buy from EXXON. A one day shut down can't work but if we all avoid one company, just watch what happens. Thanks, remember we're not Lybia or Syria so we'll get no support from Washington.

April 23 2011 at 8:17 AM Report abuse +1 rate up rate down Reply