Could Living Without Credit Cards Reduce Spending?


photo: maury.mccown

I’ve decided to give up my credit cards for one month beginning April 1. Nope, this is not an April Fool’s joke.

I got the idea after talking to a friend who had to cancel her credit card because of fraudulent charges. She didn’t have a backup and was forced to go without a credit card for about a week.

My friend was astonished at how different it felt to make regular purchases – with cash. At Target she picked out a gift for her grandson’s birthday that came to $61. She balked. $61? In cash? She would not have thought twice about swiping her plastic.

My friend’s experience made me wonder. Is it easier to stay on budget with cash? I suspect going cash-only will help me save even more than basic budgeting. I pay my bill in full every month so this experiment is not about learning to spend within my means. It’s about spending less.

If you hold one of the 576.4 million credit cards circulating in the United States, you may be tempted to go cash-only, too. I hesitated to give up credit because I spend cash so easily. If I go cash only, will I run out of money in days?

I asked readers on my blog,, what they thought of a cash-only experiment. Guess what? They said DO IT! When I last checked, 86% of readers had voted yay, 8% suggested an alternative, 4% said “no way,” and 2% had no opinion (but were nice enough to vote).

A reader named Richard said he would never give up using credit cards because of the perks. “We use our credit card for everything we can,” he commented. “Why? Airline miles. Last year we flew roundtrip to London, business class, for a total of $330.”  (That was used to cover taxes, he explained.) However, Richard says he uses Quicken to immediately deduct all purchases from his checking account: “Sort of a pseudo-debit card, so it’s like we pay cash. I pay the credit card bill online a day or two before the statement date so our credit report shows minimal card usage.”

Another reader, Ashley, pointed out another disadvantage of shunning credit cards: “A reason I have had problems making the switch is that I use and if I use cash it can’t track my purchases. I could but always forget to update and next thing I know I don’t remember if I spent $5 on groceries, $10 for a meal and $5 for parking or was it $10 on groceries and $5 on the other two.”

But reader Jenni says there is one major perk of using cash – staying on budget! “A dear friend uses this method All The Time, and she has 3 girls in various activities. Her budget is planned down to the penny, and when they are paid she gets out the cash she will need for the entire month. She bags the cash for their activities and labels them (i.e. “piano”, “ballet”, etc.), then does the same with her bills (“market”, “cleaners”, etc.). She even has a “miscellaneous” baggie for gifts and mishaps. She saves quite a bit of money every month, and she and her hubby are self-employed, so this helps in leaner times. Her spending is never out of control! LOVE her organization.”

With that reassuring comment in mind, and just one day before my self-imposed credit-card moratorium begins, here’s how I am preparing:

* I’ve hidden my two credit cards in my jewelry box so they are out of sight, out of mind.

* I’ve averaged my credit card bills from January, February, and March and set that as my spending limit for April.

* Heading to my local bank branch to withdrawal a fat roll of cash (my average credit spending from the past three months).

* I plan to carry around $100 at a time for security.

* Start spending!

My biggest concerns are safety, not having enough cash on me, and figuring out what to do about online purchases that require credit. But at least I don’t have to worry about identity theft. I’ve decided to keep paying two bills – cell phone and student loan – as I have in the past, through a transfer from my checking account. These bills are consistent month to month and I don’t have the option to not pay them. My focus is on how using cash changes my day to day spending, not my fixed expenses.

Okay! Ready, set…cash!

Julia Scott blogs about bargain-hunting at Check back with MintLife next week for an update on Julia’s cash-only experiment.

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