“I’m playing grown-up!” As a ten-year-old, I didn’t understand why that got my parents’ attention so completely.
In my back pocket, I was carrying around a thick, old wallet I had found in the attic. It was full of credit cards. All different kinds. Very colorful. It hadn’t crossed my mind to do anything with them yet; I was just walking around the house with my chest puffed out.
As a kid, you don’t understand what all is going on behind a credit card transaction. They can seem like a magical key. Toys, groceries, restaurants, vacations… the world is in the palm of your hand, and it measures 3.370 x 2.125 inches.
We’ve heard people recommend foregoing credit cards and sticking to debit cards and cash, but what would it be like to actually do it? Would you really spend less? Rather than dismiss the idea as too weird, my wife and I gave it a shot.
Financial security is part of our need for Security. When you’re in debt, it’s hard to focus on discovering your life’s purpose or bringing out the best in those around you. Think of this as a case study in sharpening the saw, an exploration of how a change in behavior can produce (hopefully) better results.
On one hand, this wouldn’t be that big of a change. We didn’t carry a revolving balance—we would charge things on a cash-back rewards card, then pay the balance in full each month.
On the other hand, it would be change. There would be risk. But risk works both ways. If you want different results, you have to be willing to try different things, no matter how weird they seem.
Going without credit cards wasn’t that different.
Here are the most common questions I was asked when people heard what we were doing:
Where can you even use a debit card? Pretty much any place you can use a credit card.
What about fraud? When you run your debit card like a credit card, you have the same fraud protection as using a credit card.
What if you don’t have the funds in your checking account? That means you’re trying to spend money you don’t have. Don’t do that. Plan your spending, track your accounts, and you’ll be fine. I found that I shopped with a greater sense of peace because I knew that we had the money to pay for it right now, instead of thinking “well, we can probably cover this with the next paycheck.”
But this is the 21st century! PayPal, Amazon, iTunes, and Google Wallet all work just fine without a credit card. So does ApplePay.
What about vacations? We took a vacation. We budgeted for it, used a debit card on the road, and didn’t come home to debt.
The thing I was most interested in was how it would work out was a trip to Colorado Springs for the Platform Conference in November. Most of the concerns I heard about going without credit cards involved travel. It turned out fine.
- The flight. There were no problems booking the flight. United didn’t care that I was using a debit card. I purchased the tickets ahead of time and even needed to make a couple of (thankfully free) changes, and everything went smoothly.
- The hotel. When I checked in at the Broadmoor, the clerk noted that it was a debit card, cautiously explained to me how authorization holds work, and asked if I had a credit card I wanted to use. I assured him I was aware of the hold and confirmed that I would be using the debit card.
- The rental car. This was the interesting one. I discovered that policies vary considerably between companies. Some won’t let you use a debit card at all, and some will only accept a debit card for out-of-town reservations (i.e., you’re flying in to an airport, which I was). I decided to go with Budget since they don’t care whether you’re paying with a debit or credit card. (They also have the standard explanation of how an authorization hold works.)
The only thing I couldn’t do all year was create an Apple ID for our kids. To create an Apple ID for a minor, you have to have a credit card on file with the iTunes Store, not a debit card.
Almost thirty years after my father’s opportunistic teaching moment, we put conventional wisdom to the test. We made it the full year and haven’t switched back yet. The cash-back rewards would be nice, but it’s also nice not having to worry about paying off the credit card each month. And we have spent less, mainly on impulse purchases, so more money has stayed in our pocket, which is very nice.