I don’t have a credit card. I haven’t had one for a number of years (a long story I’ll save for another time). People are often surprised when they learn this because many believe one cannot make hotel reservations nor rent a car without a credit card. Neither of those beliefs is correct; you absolutely can reserve hotel rooms and rent cars using a debit card. It just takes a little prior planning to pull it off. It’s not as convenient, but to me the benefits outweigh the extra work.
I haven’t yet run into a hotel which won’t take a debit card to hold a reservation. If you are using a debit card, I recommend you call to make your arrangements. Tell the person you speak with that you are using a debit card. Ask them how much the bill will be so you’ll know how much to plan for. Also, and this is very important, ask them how much they will reserve on your card for incidentals. If the amount they quote is too much, ask if the amount can be lowered if you promise not to charge to the room or use the mini bar.
I recently stayed at a luxury resort in Las Vegas, and, based on the agreement not to charge to the room my incidentals hold was set at $200. Keep in mind, depending on how your bank operates, the incidentals hold can stay in place up to ten days. Be sure to budget for that just in case.
Some car rental agencies are not as open to accepting debit cards. This is, perhaps, due to the increased potential for damages from accidents (and the way many people mistreat rental cars). As with hotel reservations, it’s a good idea to call and make sure to let the reservation person know you are planning to use a debit card. There may be restrictions such as no out-of-state driving or the mandatory purchase of extra insurance. Again, it’s important to ask up front how much the total is expected to be so you know how much to budget.
Walk Away Power
In the case of any business, if they don’t take debit cards or place too many restrictions on their use, take your business elsewhere. Tell the person, politely, the reason why you won’t buy, rent or stay with them. Perhaps if enough people speak up, they’ll change their ways.
Financial and business leadership teacher Dave Ramsey runs his entire organization on debit cards. Each person who travels is issued a company debit card to use for travel. In his EntreLeadership training, Dave recommends businesses set aside some retained earnings to fund debit card-based travel and purchases.
Is going “sans credit card” for you?
I say it is, but you may have to work towards getting there. Make a plan to set aside some retained earnings each month for cash purchases via debit card. As that fund grows, you can use your credit card(s) less and less and eventually wean yourself off them altogether.
What about you? Are you going “cash only” in your business? What tips do you have for those who may consider dumping their credit cards? Please feel free to share in the comments.