At the same time, if you plan ahead and make certain that you always have other forms of payment on hand, you can live without a credit card. In fact, it may be good for your personal finances if you are able to do this. Credit cards cause debt problems if they are not used and managed correctly. For people who already have debt or those who want to avoid it as they organize their finances, going without a credit card can be worth the effort.
Here are some tips for living without a credit card.
1. Find a way to make online purchases. One of the biggest advantages of credit cards is that they are the safest, easiest financial tool for making online purchases. Luckily, there are multiple alternatives for people who have decided to cut up their credit cards. Debit cards also work online. The drawback is that they do not have the same level of fraud protection. What can you do to limit the risk? You could use a prepaid card with a low balance for online purchases. This way, if your card number is stolen, the thieves will not have direct access to your checking account.
2. Use store-specific gift cards. If you want a convenient way to make purchases, consider using gift cards. These cards are more convenient than cash, and some stores allow you to register the cards online so that you can report them stolen or lost and get a replacement if necessary. This gives you the convenience and some of the security of a credit card without the same risk of debt.
3. Have a plan for borrowing money if needed. What if you need to borrow money? Sooner or later everyone is confronted with a financial emergency that requires a loan. One easy option is to get an online personal loan. These loans do not require a complete credit check, and the application process takes a matter of hours, so they are almost as convenient as credit cards. However, since most online personal loans are paid back in installments, there is less of a chance of building debt.
4. Make a rainy day fund. The final thing that you can do is limit the need for borrowing by creating a savings account with money that you can use in an emergency. The money in this account may not cover the entire cost of the unexpected expense, but it can lower the amount that you will need to borrow from the online personal loan provider.
With these tips and good organization, you can easily manage your personal finances without a credit card.