How to Live Without Credit Cards

Many people believe that the only way to a good financial well-being is by having a credit card. By treating a credit card with respect and using it only along with a budget plan, many Americans are able to do well. But why pay credit card companies APR and fees when it's possible to live life without a credit card?

This may seem like a strange way to live, but did you know that nearly 30% of Americans do not have a credit card? That's a pretty astounding number! Especially when the number is increasing. In 2009, the number was closer to 20%. Sounds like good news for the economy, right? So how do these people do it? What's the trick to being able to live happily without credit cards? There are many things YOU can do to start cutting credit cards out of your life.

Why Avoid Credit Cards?
Credit cards are great for emergency money and rewards, right? Wrong! If you're wondering why you should avoid credit cards, the answer is simple: Why give YOUR money to credit card companies? Think about it this way, the average APR on a credit card is 14.48% and the average credit card debt per household is over $15,000. That's roughly $2100 per year that could be saved by not paying interest! Imagine having $2100 extra per year to spend on clothing, Christmas gifts, house payments. That's a really nice chunk of change.

If you have a rewards card, you're probably paying even more in interest. If you've ever cashed in your points, you may have found that it takes forever to save up for something like a coffee maker, when you could just buy one outright with the money you've saved by not using a credit card!

But I Need a Credit History!
If you're reluctant to get rid of your credit card because you want a healthy credit history, there are actually tons of other ways to build a healthy credit history without the "help" of credit cards.

Did you know that by just having a savings or checking account that's in good order, you're building a healthy credit history? Installment accounts such as personal loans and auto loans are also a great way to build a healthy credit history. Just make sure you make payments on time. You don't need to have revolving credit to have a good credit history.

How to Live Without a Credit Card
If you have a credit card set up in the case that there's an emergency, you could ditch the credit card and create a savings account with the purpose of saving for an emergency. By getting a savings account that accrues interest, you would be earning from your emergency fund instead of losing money on interest.

Another great idea is to start saving for things that you would like to purchase instead of buying it outright with a credit card. While it's fun to go to the mall and impulse buy some really nice clothes, you will find that you appreciate your purchases much more if it's something you've saved for. Make sure you've got your emergency fund set up before saving up for other goals so that you can play it safe. Also, it can be empowering to meet a savings goal.

There are many companies that require a credit card in order to use their services (car rentals, hotel rooms.) Luckily, there's a well-known loophole -- get a debit card instead! Most banks offer MasterCard or Visa debit cards. You can use these cards any place that Visa or MasterCard are accepted and the money comes out of your checking account instead of using credit. This is the perfect way to enjoy the benefits of being a credit card holder without the huge drawbacks. Also, if you shop online, you can use your debit card or you can use a service like PayPal or BillMeLater.