The Cash-Only Movement: Understanding the Shift from Credit and Debit Cards
As the world becomes increasingly digital, more people are choosing to rely solely on cash for their transactions. This shift has been particularly prominent among the underbanked population in the United States, including individuals like your husband and your father who used to depend entirely on cash.
Has Anyone Given Up Credit/Debit Cards and Gone Completely Cash Only?
The Personal Experience of Switching to Cash Only
My husband and my father are two examples of individuals who have successfully transitioned from a reliance on credit and debit cards to using cash exclusively. They found that the frequent debts and associated interest were too burdensome, and made a rule to only pay for necessary items in cash.
However, over time, both realized that carrying a credit card for emergencies was a sensible decision. Major life events such as car breakdowns or emergency flights could be managed much more effectively with a credit card. Hence, they reintroduced a credit card for emergency situations, ensuring their financial safety while maintaining their cash-only principle.
Understanding the Underbanked Population
The underbanked population is a significant segment of the U.S. economy. This group, which includes immigrants and middle-class Americans, relies heavily on alternative financial services, such as check cashing businesses.
One of the key factors contributing to this trend is the shadow cast by the U.S. economic crisis between 2007 and 2011. Numerous homes fell into foreclosure, families were displaced, and financial instability became a norm. This experience profoundly impacted the perception of the banking system, making many wary of relying on traditional financial institutions.
The Role of Credit Bureaus in Underbanked Communities
Despite the ongoing financial instability, credit bureaus continue to offer their services with an emphasis on free credit scores. However, these scores carry little weight, as they are owned and controlled by the same companies distributing credit information.
As Joanne Gaskin, FICO's senior director for Scores and Analytics, explained, 'Allowing the credit bureaus to offer VantageScore in this new process will not increase competition it will consolidate their power at consumers' expense.' This consolidation of power often leaves underbanked individuals feeling like they are part of a system designed for deception rather than transparency and fairness.
Their experience reflects a broader disillusionment with the financial system, where complex and opaque practices hide true costs and risks. Many in this community firmly believe that the financial system is rigged against them, and thus, they prefer to use cash to avoid falling into debt traps.
Conclusion
The journey to the cash-only lifestyle is not without challenges. However, for those who have made the decision, it brings a sense of control and independence. As long as you are cautious and plan ahead, the cash-only approach can be a viable option for managing your finances.
For those considering a similar path, make sure to understand all the implications and develop a robust emergency fund to handle unexpected expenses. Good luck on your financial journey!