For some people, it’s hard to imagine surviving more than a day or two without using a credit card. For many, credit card usage is a part of their financial routine. However, there are still people out there who stay away from credit cards completely and the number of people reducing their credit card usage is growing. Through October of 2009, the number of new credit card accounts was down 46% compared to the first ten months of 2008. In November, revolving credit was down 20% from a year earlier. These statistics reflect tighter credit standards in general, but also a growing number of people learning to live without credit cards.
Living without credit cards isn’t easy though and it will be an adjustment for anyone who has relied on credit cards in the past and it’s probably a good idea to at least have access to a credit card for emergencies. It’s difficult to do simple things like renting a car or checking into a hotel without having a credit card on file. Many consumers use debit cards for these types of purchases, but they run into problems with companies refusing to take debit cards or putting huge amounts of money on hold and creating overdrawn checking accounts. Here are some of the reasons people are trying to become less reliant on credit cards.
Anger at the Credit Card Industry: A lot of people feel some personal bitterness toward credit card issuers after feeling like they pulled the rug out from under consumers in the toughest possible economic environment. There’s a sense that credit card issuers can’t be trusted and that we should be able to survive without them. New laws designed to protect consumers and better regulate the credit card industry are helping to restore confidence in creditors but there are still people upset about the business practices that they’ve witnessed over the past two years.
Wider Debit Card Use: Before debit cards were available, the choices for people without credit cards were to use cash or write a check. Both were common, but debit cards provide quick, easy, and safe access to the funds in a checking account and their usage is growing every year. In a recent survey, 46% of respondents said that using debit cards helped them to control their spending and 28% reported that they were using credit cards less and debit cards more frequently.
Desire for Less Debt: There are enough horror stories about people allowing their debt to spiral out of control and becoming slaves to their credit card payments that consumers are getting smarter when it comes to credit card use. A recession and high unemployment like we’ve seen over the past few years scares people and although the economy is recovering, people are reining in their spending habits and taking control of their debt situations. Paying off debt can ease your financial stress and allow you to control your finances instead of allowing your finances to control you.