30 years without a credit card
With Americans’ credit card debt at record levels and growing at a rapid pace, one of our staffers shares his secret for staying out of credit card trouble. It's simple—he doesn’t have any credit cards.
I recently reached what I bet is a rare milestone: I have now gone 30 years, basically my entire working life so far, without a credit card.
This may make me seem like some kind of nut, or at least an anachronism. You know, the type of person who still isn’t convinced that indoor plumbing is worth the investment.
I do have what’s sometimes called a “travel and entertainment” (as opposed to credit) card, in my case American Express. I’m not here to plug Amex, but I believe a card like that, which has to be paid off in full each month, imposes a certain restraint that could keep many of us out of financial trouble.
It’s almost impossible to go through life without some sort of plastic, of course. Try renting a car or booking a hotel room, for example. If you have the discipline to carry a conventional credit card and pay it off in full each month, bully for you. But many of us clearly don’t have that discipline.
Debit cards are another option, but they have their own problems.
As a result of never having a credit card, I have never paid a cent of interest on one. Or a late fee. Or anything. Nor do I think that I have denied myself or my family much in the way of material stuff, vacations, or whatever.
None of this is to say that I am wiser or more moral than anybody else, including my friends with wallets full of credit cards and ample debt on them.
In fact, I applied for a card when I first joined the grown-up work force and would have happily accepted it. But I was rejected for lack of a sufficient credit history. Seemed like an insult at the time and had me steaming for a day or two. I never did reapply.
Looking back now, though, it may have been a lucky break—for me, if not the card companies.—Greg Daugherty
Greg writes the “Retirement Guy” column in the Consumer Reports Money Adviser newsletter.
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Posted by: Dave Johansen | Mar 7, 2008 9:34:06 AM
I have never heard of a "travel and entertainment" card before. Where can I find out more information about them?
Posted by: Thomas Gruber | Mar 7, 2008 1:51:26 PM
Honestly this seemed a little stupid to me. Greg obviously has enough discipline to not carry a card for 30 years so why wouldn’t he have enough discipline to not carry a balance if he did have a card? So he’s survived, but why does he have to miss out on the convenience of a credit card? (He could even get cash back on purchases that he would make anyways.)
Posted by: Bob Murphy | Mar 7, 2008 4:05:31 PM
Some people dislike owing money on a credit card more than any convenience or benefits they could get from having one. The hard way to avoid owing money is to track your purchases and never spend more than you can pay off at the end of the month. The easy way is to not have a credit card and not make any effort to get one. There's as much discipline involved in not carrying a credit card if you don't have one than in not riding a unicycle: none at all.
I had a whole slew of credit cards and ran them all up. Now I have one, and have an agreement with my wife that I won't use it unless she concurs. That means I use it a handful of times a year, and it keeps me out of trouble. I'd rather focus my self-discipline efforts toward things like staying in shape.
Posted by: weave | Mar 7, 2008 4:11:53 PM
I'm a lot like Greg. My only plastic is debit card (for taking cash out of ATM, not transactions) and an Amex card. What's so stupid about it? Credit card companies want people to carry balances so paying off in full each month isn't going to earn you any "good customer" marks with them, which can affect customer service when having to deal with them. On the other hand, Amex charge cards expect payment in full. So doing so earns you "good customer" marks with them.
Posted by: ideagirl | Mar 7, 2008 4:37:06 PM
or...some of us just don't care to have any unnecessary debt...
Posted by: downercow | Mar 7, 2008 4:59:30 PM
So, the author used a charge card for 30 years? If this was a charge card like the "green" one, he's probably been coughing up an annual fee just to use it. Credit cards without annual fees have been widespread for 20 years. If he paid 20 $50 annual fees for balances he was paying off, then this was just as foolish as overspending and running a balance on an unsecured credit card.
Posted by: Steverino | Mar 7, 2008 5:08:09 PM
I have to agree with Thomas. I don't see what additional discipline is required to not charge up unpayable bills on your credit cards. I like the convenience of not having to carry cash, and the information flow that I can get from online statements.
If I were to carry nothing but cash for a week, I would have a difficult time tracking my expenses. Would have to carry a little notebook with me or something; all the time. Now THAT's discipline.
If I walk into a store to buy a bigscreen TV, I already know how much I can afford. Same with tires, clothes, etc. At the end of the month, I pay off all the credit cards (5, in my case).
If I cut the cash flow in my checking account too closely, my bank protects me from overdrafts by using my credit card. And I can immediately move case from money market or savings to cover the charge.
How much does Mr. Daugherty pay for the priviledge of carrying an AMEX card, again?
Posted by: Brandon | Mar 7, 2008 5:08:34 PM
"Travel and Entertainment Card" sounds a lot like a well-managed credit card to me. Does it come with rewards features, or just the self-congratulation?
Posted by: ChristianPF | Mar 7, 2008 11:21:01 PM
Wow!! Greg, I must say that is impressive. I am very happy that you did that, if for no other reason than that people would know that it CAN be done. The credit card companies want people to believe that cards are as necessary to our survival as oxygen, and you have clearly dispelled that myth. Way to go!! It seems that it would be a little inconvenient, but it sounds like you didn't really think so...
Posted by: dave | Mar 8, 2008 2:24:25 AM
I'm exactly the same. I have an AMEX. And, yes, it pays points. While I pay $50 a year for it, I recoup about $1500 annually in point-worth. This is my Christmas money. I buy all of my Christmas gifts with my points. Besides paying me for using it, I do not pay interest and keep myself debt-free every month. And I refuse to shop at retailers who do not accept my card.
Posted by: humphrmi | Mar 8, 2008 2:33:20 AM
This story was cross-posted on Consumerist, and as I said there, the Green Card lets you revolve if you ask them. You pay interest, probably horrible interest, and some fees. But the point is it's not much different than carrying a Visa card. The point is self-control, not whether or not you carry credit cards.
Posted by: Noelle | Mar 8, 2008 5:19:38 AM
I don't get this at all. Something like 40% of people never or almost never carry credit card balances, which is the same as using a charge card like AmEx -- except we don't have to fork over an annual fee for the privilege. Many of us even earn cash back, and credit card issuers are also much more forgiving if we do happen to make a payment late. I don't carry balances, and despite claims above, my credit card companies still treat me very well. They make most of their money off transaction fees, so as long as I use the cards regularly, they're happy.
This isn't about whether you have credit cards. It's about whether you have the discipline to use them properly.
Posted by: Cindy Rosenthal | Mar 12, 2008 4:59:29 AM
I've used credit cards for over 50 years--ever since I tried to get phone service for an apartment I was renting but had a problem because I hadn't established a credit rating because I'd always paid cash. I've always paid my statement in full every month and taught my children to do the same. They didn't realize there was an option until they were in college and saw their friends run up debt. Like Noelle, I used a card with no annual fee and one that returns me a percentage in cash. Also, since I have a checking account that pays interest, albeit very small, the longer I keep my money in my account the better.
Posted by: Linda | Mar 12, 2008 4:17:44 PM
The problem with dave's method — "And I refuse to shop at retailers who do not accept my card" — is that American Express charges the retailer a higher fee. Many very good places on tight budgets don't accept AmEx for that reason.
Posted by: Lloyd Shane | Mar 12, 2008 5:51:43 PM
Bravo!
Posted by: Laura | Mar 18, 2008 2:56:20 PM
how have you established good credit without a credit card?
Posted by: aaron | Apr 2, 2008 11:15:40 PM
you dont need a credit card to shop online or to establish credit. online shopping can be done via paypal like services tied to a bank account, or a check card from your bank. Car loans mortgages and monthly bills all are ways of establishing and keeping good credit. The only card I have is a Shell card which is paid off every month. Everything else is paid for with my debit card.
Posted by: promotional card printing | Jul 21, 2008 3:51:38 AM
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Posted by: MikeC | Sep 3, 2008 9:38:37 PM
Congrats Greg!
I'd had an Amex card for 25 years and several other "credit cards" too. I've also never paid a finance charge, or any fee other than annual fees for my cards. About 5 years ago, I stopped paying annual fees as well and -- get this -- they all started paying me. Amex pays me $800 to $1100 per year and the others pay me a total of $200-500/yr. I get the Costco Amex card and charge everything I can on it. If a merchant doesn't take Amex, I use a credit card that rebates the most. Aside from having to remember which credit card rebates the most for different types of purchases, it's pretty sweet. You might want to give it a try. You certainly seem to have the discipline to steer clear of the finance charge trap and unnecessary purchases. Cheers!