Sunday, May 31, 2009

The Credit-Free Diary

Consumers and banks alike are moving rapidly away from credit cards. If this trend continues, within 5 years, there may be no credit cards left. What would life be like if credit cards disappeared, or, to quote Ellen DeGeneres, without a credit card, “How do you do anything?”

The debit card is part of the answer, of course, but to get a handle on how big a change we’re considering, I will attempt to get through the month of June without using a credit card or a debit card. I won’t be going so far as to leave my credit cards at home, because I have a feeling that there are whole areas of commerce that won’t recognize a person without a payment card. At the end of the month, and several times along the way, I’ll let you know how it works out.

There are some failures to announce in advance. My communications accounts (telephone, Internet access, and the like) are billed automatically to my credit card once a month or once a year. I don’t want to risk experimenting with those accounts, as the communications business is in even more tenuous condition than the credit card business. Besides, the automatic payments question, while important, is somewhat removed from what I’m trying to find out here.

Even without credit card transactions, I am not exactly credit-free. I owe a bank about a third of the value of my home, and I’m promising to pay that off over the next 27 years. Many people like to think of their home payments as a completely different world from credit cards, but it isn’t really separate. If I can cut my credit card spending, perhaps I can pay off my home that much faster.

This afternoon, to get started, I paid off all my credit cards. I found that I had balances on three cards. It took 11 minutes on cycle through all the credit card web sites and submit payments of $346. When those payments process tomorrow, I will have a credit card balance of zero. One of the transactions I paid for was for a music download. The next time I want to download music, how will I pay for it?