CW13: Can You Really Get By Without a Credit Card?

Credit cards. Can’t live with them, can’t live without them. Or can you? Without question the number one debt problem for most of my bankruptcy clients is credit card debt – a lot of credit card debt.  On a regular basis I help clients who are facing $30,000 – $100,000 in credit card debt!  Wow! The monthly minimum payment on debt like that is thousands (with an “s”) per month. It is not hard to see how a situation like that can crush a family long-term and end in bankruptcy.

And even though the weight of credit card debt is staggering, often one of the biggest concerns I hear people voice about filing for bankruptcy is how it will impact their ability to keep credit cards they have or ability to get new credit cards after the bankruptcy is over.

It is understandable. Many (if not most) people believe that you need a credit card for things like rental cars, hotels, flights, and for use as a safety net for emergencies. The thing is, a debit can get you everywhere you want to be, just without the debt.

Is It Even Possible to Get a New Credit Card After Bankruptcy?

It may be surprising, but within weeks of filing bankruptcy most of my clients report being inundated with letters advertising car loans and new credit cards. These are not “good” cards by any means – high interest rates and bad terms – but usually available if you wanted one.

Notice I said “wanted” one, because you don’t really need a credit card to get by.

Won’t I Need a Credit Card to Rent a Car

You don’t need a credit card to rent a car.  My wife and I haven’t had a credit card in about ten years.  I have rented cars and never had it be an issue. Some car rental companies will add a deposit onto your debit card, but I have never experienced, nor has any of my research shown, that a credit card is necessary to rent a car. Same thing goes for hotels and flights.  A debit card will get you where you need to be.

I Need a Credit Card for Emergencies

The thought of living life without a credit card safety net freaks people out. Things always come up. I get this. As a father to six children my life is nothing but one unexpected expense after another.

But I have found that if you work to set aside some cash for emergencies that a credit card is not necessary. I recommend that you follow the Dave Ramsey plan and save up $1,000 in savings for emergencies. Then when those unexpected expenses come, you will be better prepared to weather the storm.

Life Without Credit Cards

Living without credit cards takes some getting used to – especially if you have spent your entire adult life using them. And if you are like many people you will resist the very thought and will likely be able to come up with several reasons why credit cards make sense.

But deep down,  we know that a credit card debt lifestyle is not the way we should be living.  We all think that we will be able to pay off our balance in full each month, though studies show that 60% of people don’t pay off their cards, carrying balances that become more and more difficult to pay off.

Bankruptcy is there to help you deal with you overwhelming debt problem. And often bankruptcy is the best way to effectively deal with your debt problem.  But once you get your bankruptcy fresh start, commit to never go back. Commit to take the steps necessary to end your debt cycle once and for all.  Commit to live a life without credit cards.

 

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