How to Live Life Without a Credit Card in Canada

There are even millionaires who lost it all and came back from it, so after bankruptcy you need to rebuild your credit history. To do this, you need to show that you’re paying your credit card bills regularly and on time but the chances of getting approved for a credit card are almost zero in the six years that the bankruptcy will show up on your credit history. The solution is a secured credit card, where you pay a security deposit before getting the card. Banks will be more willing to give you one of these.

If it’s the convenience of a credit card that’s important to you, you can ask someone close to you to add you as a supplementary card holder. The best credit cards in Canada all allow several supplementary cards, sometimes for no extra fee. When you go this route, though, be diligent about paying your debt on time and not abusing the card, so that you don’t ruin your relationship with your loved one.

Booking flights, hotel rooms, car rentals and the like commonly requires a credit card. However, more and more travel service providers now accept debit cards too. Check with them beforehand to be sure. They may also accept cash and PayPal.

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If you want to rent an apartment or home, the landlord will normally check your credit history to see that you’ll be able to pay the rent, even in the cheapest cities in Canada. If you don’t have a credit history because you don’t have a credit card, offer a higher security deposit than the one required. This shows that you have enough money-management skills to have built up a good amount of savings.

Probably the most important money-management skill you can have is to budget well. Learn how to track your income and expenses and allocate specific amounts that you can afford to spend on specific things. Leave some room in your budget for the fun stuff but make sure you have all of your financial obligations covered too. Then use your budget to guide you when spending.

Whether it’s the big things like a home or a car or for the little things like a new gadget, paying for what you want becomes more difficult if you can’t just swipe a credit card. So, learn some money saving tips and start putting away dollars every month. It helps to set saving goals, like the amount you’ll need for a car or a starter home. This way, you can buy even the big things with cash and remain debt free.

One of the reasons people love credit cards is that they don’t have to carry cash with them. However, you can still pay your friend for your half of lunch, pay the bills or order those luxurious little silk items online without a credit card. All you need is your smartphone and an online payment app like PayPal, Venmo or Google Wallet. You can even get paid this way too.

With a credit card, you pay interest every month you carry a balance. Without a credit card, you don’t have to pay interest but what about taking it a step further and earning interest instead? A savings account does this already. A high-interest savings account allows you to earn even more interest and is one of the ways to invest $100 and grow it to $1,000.

A credit card comes in handy when you don’t have an emergency fund and need to pay for the unexpected. However, you’ll end up paying more because you’ll have to cover the interest charged. Having an emergency fund where you can withdraw the money and pay in cash is still the best option, so set aside some money in your budget for this.

One of the biggest drawbacks of a credit card is that it can give you a false sense of financial security, so you don’t think twice about swiping it for instant gratification. Living without a credit card requires a change in mindset, so you learn to live within your means and without the things you can’t afford. The gratification won’t be instant but it will be much bigger when you manage to retire at 40.