Five Things That Are (Nearly) Impossible Without Credit Cards

If “Things You’d Find in a Wallet” were a survey question on Family Feud, chances are that “credit card” would be right up there just below “driver’s license” and cash. It says something that credit cards are as ubiquitous as your photo ID. Both are pieces of plastic that you simply must have if you want to enjoy all of the privileges that are reserved to your fellow Americans. And just like it’s difficult – or even illegal – to purchase tobacco and alcohol, operate a motor vehicle or board a plane without a driver’s license, it’s equally as hard to get by without a credit card. In many cases, you can pull it off. But doing so comes with a financial premium as well as inconvenience. Consider some of these ways that credit cards have been built into our way of life and how doing without them can sometimes be a drag.

Renting a Car

Driving around an unfamiliar city in someone else’s high speed piece of machinery that’s worth tens of thousands of dollars has liability written all over it. Rental agencies like to give themselves some insurance (on top the insurance that they undoubtedly already have) by having your credit card on file just in case you somehow land the car at the bottom of a lakebed or crushed into a small cube. If the car doesn’t come back in one piece, then they’ll simply bill you for it. No biggie. But without a credit card, they don’t have that comfort. Because of this, many car rental agencies don’t even allow cash rentals. You can often rent a car using a debit card, but you’ll have to put down a hefty deposit or accept a hold for up to $500 plus the estimated rental costs on your account. This can be a major pain, since these holds sometimes take up to 2 weeks to be released.

Of course, this doesn’t mean that you have to pay for a rental car with a credit card to avoid a big deposit or hold on your account. You can reserve your car with a credit card and then pay with a debit card or cold hard cash when you return it. But for anyone whose sworn off credit, make sure you research the cash rental policies before you go to pick up your rental car and be prepared to pony up some money down.

Booking a Hotel

There’s no rule saying that you can’t pay for your hotel room with a check card or a pillow case full of Sacajaweas. But like rental cars, most hotel owners do like to have some kind of insurance in case you decide to go on a rock star-style hotel trashing rampage. Most hotels will accept a cash deposit at check-in in lieu of a credit card, but if you’re booking in advance at a faraway location (which is almost always the case – after all, why would you get a hotel room half a block from your house?) you can’t exactly drop in to plunk down your down payment. Nor can you attach a $500 bill as a PDF and email it to them.

Your only options then are to find a hotel that doesn’t require a deposit or credit card or accepts Paypal (Hotwire and Hotelopia, for example).

Building Credit

Revolving credit is one of the best ways to establish a credit history for a number of reason. First of all, it allows you to start small – say, with a credit line of $1,000 or less – and slowly build up more credit worthiness. Secondly, FICO scores favor consumers with a mix of credit types. Installment loans and mortgages will only get you so far. Plus, without a solid credit history, it’ll be tough to get something like an auto or home loan in the first place.

Having little or no credit history completely bars you from some transactions and for others, it simply makes it more expensive. Auto dealers may be willing to float you a loan on a deposit and a limited credit history, but you’ll likely pay more in interest and get a smaller loan than someone with an excellent credit rating.

There are ways to build credit without credit cards but they are unconventional routes that take longer and sometimes carry the same – if not greater – risks as getting a conservative credit card.

Getting Free Stuff

It may seem silly to talk about credit card rewards now that they’ve been pretty much slashed across the board, but for those who use credit cards responsibly without incurring finance charges, rewards programs are a simple way to get stuff for free. Even if it’s something as small as a magazine subscription, it’s still an added perk that someone other than you paid for. True, debit cards do sometimes offer rewards but they are never as generous as the programs attached to credit cards. And if you’re paying in cash, the only way you’ll rack up free loot is by getting a buy 10 get one free card stamped the old fashioned way.

Fighting Fraud

This one seems counterintuitive – after all, many of us decide to kick the plastic to prevent identity theft. But that’s not what we’re talking about here. (Besides, there are more ways to steal your identity than via your credit card.) Credit cards – both as a service and as a government mandate – have built-in consumer protections. For example, if you order something and it never arrives or you order something and it’s a blatant ripoff, you can simple have your credit card company do a chargeback and just as easily as your money was zapped to that shady dealer, it can be zapped back. Getting your moneyback from a snakeoil salesman in a cash transaction will take a little bit more effort (i.e. legal action). Credit cards also protect you by extending your warranty, guaranteeing you a low price and insuring your purchases from theft or damage. The fine organization printed on your greenback (the ol’ U.S. government) isn’t likely to do the same for the things you buy in cash.

As you can see, life without credit cards isn’t impossible. But it is a little bit inconvenient. And that’s how the entire “to credit or not to credit” quandary pans out. You can certainly say “no” to plastic in your everyday life, but you’ll pay a price for going against societal norms, much like you would if you decided to eschew public utilities or email. So, what do you think. Is it worth it?

img c/o sean davis

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