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.

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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."