Credit cards are ubiquitous, and we're even starting to see merchants that won't accept cash. For example, airlines such as Southwest only accept plastic for in-flight purchases. It can also be difficult to make travel plans without a credit card, as many hotels and rental car companies require you to place a credit card on file with them in case you run up room service or parking charges. If you don't qualify for credit or are just committed to living a debt-free life, you might be left wondering if it's even possible to get by without a credit card these days.

If you need to book a hotel room or reserve a rental car and you don't have a credit card, you may be able to use a debit card that has a major network logo such as Visa or Mastercard. Since there is no guarantee that you'll leave the hotel room or rental car in the same condition you found it, these companies may place a hold on several hundred dollars' worth of your checking account funds. Make sure you find out what the company's policy is before you give them your debit card number and make sure you have enough money in your account to cover any frozen funds. Some companies only accept credit cards, however, so you may need to shop around.

Borrowing for Major Purchases
If you don't have a credit card because you're not interested in borrowing money, this category doesn't apply to you. If you don't have a credit card because you can't qualify for one, however, you may also have trouble borrowing for a major purchase like a car or a house. If your inability to obtain a credit card is due to poor credit, you'll have to spend some time pushing the negative items on your credit report into the past and work at building a positive history before most lenders will want to do business with you.

If you don't have a credit card because your lack of a credit history has caused your applications to be rejected, your problem is easily remedied. Apply for a secured credit card with a small credit line. Make one small purchase per month and pay it off in full. Then, check your credit reports to make sure your payment activity is being reported to the credit bureaus. This activity will begin to establish your credit history. Once you qualify for the loan you want, you can close the account and go back to living without a credit card.

What About Account Security?
You no longer need to worry about liability for unauthorized purchases made with your debit card if it carries a Visa logo because of that company's zero liability policy. You should still read your debit card terms and conditions, however, to check for any limitations on this policy, such as a different policy for ATM withdrawals. Mastercard also has a zero liability policy for unauthorized debit card transactions made in store, by phone or online as long as your account is in good standing and you have not reported two or more unauthorized events in the previous 12 months. The policy does not apply to PIN-based transactions, though the financial institution that issued your card may protect you. Read your card's terms and conditions so you understand your liability exposure before you use your debit card as a credit card substitute.

Be Prepared
Living without a credit card means you'll need to do a bit more financial planning than folks who put everything on plastic. Every time you leave the house, you need to have an idea of how much you'll spend while you're out so you can make sure you have enough cash in your pocket, a sufficient balance on your prepaid card or enough money in your bank account to cover your debit card purchases without incurring overdraft fees. This extra planning takes a bit more time and can be inconvenient. You may not be able to make purchases when it is most convenient if you don't have any method to pay for them. The upside is that you'll be limited in how much you can spend when you leave the house, which will help you keep your spending under control.

The Bottom Line

While it may be inconvenient at times, it is possible to live without a credit card. You just need to do your homework to learn which purchases may be more difficult and determine how you can best handle those situations before you make a purchase.

Related Articles
  1. Credit & Loans

    Walmart MoneyCard Vs. Walmart Credit Card

    Discover how the Walmart MoneyCard and the Walmart credit card have different benefits that may influence your decision on which one to choose.
  2. Savings

    These 10 Habits Will Help You Reach Financial Freedom

    Learn 10 key habits for achieving financial freedom, including smart budgeting, staying abreast of new tax deductions and the importance of proper maintenance.
  3. Credit & Loans

    Have Bad Credit? 6 Ways to a Personal Loan Anyway

    It'll cost you more, but borrowing is definitely doable. Here's how to proceed.
  4. Credit & Loans

    How To Minimize Holiday Debt Before It Happens

    Holiday expenses can drown you in debt. Find out how to avoid this festive spending hangover.
  5. Credit & Loans

    These Are The Best Credit Cards For Making Balance Transfers

    Handled correctly – and very carefully – a promotional credit card balance transfer offer can save you money. Here are some of the best deals around now.
  6. Investing

    How to Raise Your Credit Score Quickly

    Here are the best tips for raising your credit score quickly.
  7. Credit & Loans

    Getting Your Name Off A Cosigned Loan

    If you want to remove your name from someone else’s loan, there are four key ways to do it.
  8. Credit & Loans

    How Credit Card Delinquency Works

    When you pay less than the minimum monthly payment on your credit cards, you become delinquent.
  9. Credit & Loans

    Federal Direct Loan Limits

    How much you can borrow depends on your grade level in college, whether you're an undergraduate or grad student, and other factors.
  10. Credit & Loans

    Federal Direct Loans

    These are the most popular type of federal student loan. Read this guide to the types you can get, how much you can borrow and repayment options.
  1. Is Apple Pay safe and free?

    Apple Pay is a mobile payment system created by Apple to reducing the number of times shoppers and buyers have to pay for ... Read Full Answer >>
  2. Can you use your Walmart credit card at Sam's Club?

    Consumers can use their Walmart credit cards to shop at Sam's Club. However, they cannot use their Walmart credit cards when ... Read Full Answer >>
  3. How can you cancel your Walmart credit card?

    Walmart offers two types of credit cards: the Walmart MasterCard and the Walmart credit card. How to Close Your Walmart Credit ... Read Full Answer >>
  4. Does the Walmart credit card have an annual fee?

    The Walmart credit card does not charge annual fees to its cardholders. It does, however, have other fees associated with ... Read Full Answer >>
  5. How does NetSpend overdraft protection work?

    NetSpend offers overdraft protection that allows the account holder to make transactions or incur fees with amounts that ... Read Full Answer >>
  6. How do NetSpend cards work?

    NetSpend prepaid MasterCard and Visa cards are popular prepaid debit cards requiring no minimum balance and no credit check. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center