Is living without credit cards the best way to stay out of debt?

Americans might be more responsible now than they were in the early 2000s when it comes to the use of credit. At least, that’s what the evidence from a Gallup poll taken earlier this year seems to suggest.

The Gallup poll, which was based on random telephone interviews with 1,026 adults, shows that a full 48 percent claim to pay their credit card balances in full when the bill comes due. Not surprisingly, the opposite group, those who carried a balance each month, came in at a record low percentage since Gallup began recording this metric in 2001.

But the poll went further to reveal more about the secret lives of credit card users in the United States, and how the use of credit affected overall debt levels. For example, it showed that the average American carries 2.6 credit cards on average, but the figure jumps to 3.7 when you remove those who don’t carry a credit card at all from the equation. Furthermore, the average American carried $2,426 in credit card debt when this poll was taken. However, exclude those without a credit card and the figure quickly jumps to $3,573. So, what does this mean?

“Americans are less reliant on credit cards than in the past. They are carrying less credit card debt overall, own fewer cards, and are more likely now to say they always or usually pay their full balances every month,” Gallup summarized earlier this year.

“This suggests that credit cards — a staple of American consumer life for decades — might not be as vital a financial tool to individuals as they had been in the 1990s and 2000s, when Americans often used their credit cards to make ends meet.”

That’s a good thing, right?

Many experts would say yes.

Are Americans on Their Best Behavior Since the Great Recession?

Is the Gallup poll really telling us that Americans are on their best behavior when it comes to the use of credit? Say it isn’t so.

Gallup polls might indicate that trend, but other bean counters and media outlets are taking the opposite stance. According to this MarketWatch article from two months ago, “American credit-card debt hits a post-recession high,” Americans are relying too heavily on plastic for day-to-day living expenses. An excerpt:

“Americans added $28.2 billion to their credit cards in the second quarter of 2014, the largest amount in the last six years and nearly 200% more than in the second quarter of 2009, when the economy emerged from the depths of the Great Recession, according to new research from personal finance website After paying off $32.5 billion owed during the first quarter of 2014, consumers ran up roughly 86% more debt during the following quarter.”


It’s scary how quickly the tide can turn, isn’t it? Although personal credit card debt figures took a nose dive earlier this year, the trend certainly didn’t stick around for long. Once again, we’re racking up those balances with wild abandon and living the dream. Isn’t it grand? <insert sarcasm here>

Of course it’s not. Most people who have lived it will tell you that it isn’t grand at all — especially when you realize what it takes to pay those balances off. The cycle can be painful — the realization that you’re in credit card debt again, the struggle to pay it off, the elation at your success. The mere fact we see the cycle repeating again shows that any change was, at best, momentary.

That’s the part many people just don’t seem to get.

Drop the Cards and Break the Cycle

Still, there is a way to avoid the credit card debt cycle if you are an avid spender, says CFP Practitioner Katie Ward Brewer of

As a Certified Financial Planner, Brewer works with people to develop long-term financial plans that help them meet their goals. And since credit card debt goes against the grain of what most people are trying to accomplish, many of her clients found that, over the years, any benefits they got from the use of credit cards were soon overshadowed by the elephant in the room — their revolving debt load.

“Many of my clients that struggle with spending will choose to stop using credit cards altogether,” Ward admitted.

But she doesn’t see that as a sign of failure or an indication that something is wrong. According to Ward, life without credit is just better for some people.

“There are two groups that may want to consider discontinuing the use of credit cards,” says Ward. “The first group includes anyone trying to pay down existing credit card debt. Second is anyone who could better control his or her spending without the use of credit cards.”

Does Credit Make You Spend More?

Several studies indicate that credit cards enable people to spend more than they planned, and Dave Ramsey constantly drives this point home on the radio and on his website. According to Ramsey, using credit for everyday spending is an all-around bad idea.

“There is no positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system!”

-Dave Ramsey

That might be a harsh stance to take, but many (many) people would agree, including my friend Brian Fourman, a father and writer who blogs about his own financial journey at He and his wife stopped using credit cards altogether several years ago when they realized that their credit cards made it easier for them to overspend.

“It seemed like every other month, in order to pay our credit cards off on time, we were forced to remove money from our savings account,” said Brian. “Consequently, we never developed an adequate savings fund to handle life’s emergencies.”

The cycle went on for some time until Brian and his wife decided to drop the credit cards altogether. It was then that they learned why credit cards were problematic for them from the get-go.

“There are no warning signs with credit cards. No real limitations that you bump up against each month that make you take notice,” Brian told me. “You can spend as much as you want up to the credit limit of the card, whether or not you make that much in monthly income.”

Debit to the Rescue

Fortunately, the move away from credit cards proved successful for Fourman and his family. Once they removed credit cards from the equation, he says, their financial situation improved dramatically. All of the mystery surrounding their overspending disappeared almost instantly, and a new sense of purpose took its place.

Instead of credit, the Fourmans turned to debit cards instead, a move which forced them to keep a close eye on their bank account day in and day out.

“A debit card served as the restrictor plate on my spending. It forced me to slow down, which in turn limited the amount of financial damage I could do to myself,” he says.

Is Credit the Culprit? The Jury is Out.

Is easy credit the reason Americans continue to rack up bills they can’t afford to pay? I suppose the jury is out on that one. However, it is hard to argue how a person can get into credit card debt if they don’t have a credit card in the first place.

Still, I think the issue runs deeper. Sure, some people get into credit card debt because they have a job loss, illness, or emergency situation that necessitates it. But for every person with an emergency, there’s someone whose “emergency situation” is the new iPhone coming out or a seriously awesome trip to Cabo they’ve been planning. For most people, getting out of debt (and staying out of debt) requires much more than a stack of cards and a pair of scissors; it requires a different mindset too.

Still, if the goal is less dependence on credit cards, we have to make decisions that will set us up for success. Foregoing credit card use altogether is just one option on the table. And if your spending is a problem, foregoing credit, at least for the time being, might be just the solution you’ve been seeking.

Could you survive without a credit card? Do you think credit cards cause us to spend more? Have you broken the cycle of amassing credit card debt and paying it off? How did you break the cycle and how do you handle credit wisely now?

More about...Planning, Credit

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