By Mitch Lipka
Jan 15 As more cyber thieves steal personal and
financial information, can you insulate yourself from the risk
of having your money and identity stolen by giving up credit and
Many consumers are rethinking their use of plastic after a
massive cyber attack on retailers such as Target Corp
and Neiman Marcus. For most Americans, living without credit and
debit cards seems inconceivable. But Brie Hoffman has tried it,
and mostly succeeded over the past six years.
Hoffman, 52, says an occasional online purchase and buying
an airline ticket are the only uses for her sole debit card,
which sometimes serves as a second form of ID. It's a relief not
having a credit card, says the California resident, who has
worked as a schoolteacher and as a companion to an elderly man.
"I don't even miss it," she says. "There's a freedom in not
A side benefit, Hoffman says, is not getting junk mail. As
much as she has enjoyed living mostly off the plastic grid, she
doesn't see herself getting rid of the debit card entirely.
MAKING THE SHIFT
The move away from cards can be done, says Tim Rohrbaugh,
chief information security officer at Virginia-based identity
theft prevention and remediation firm Intersections Inc.
The Federal Deposit Insurance Corporation estimates 17
million Americans have no bank accounts - so plenty of people do
it. Most don't end up in a card-free situation by choice.
According to the FDIC, most of those people are lower income and
overwhelmingly don't feel as though they have enough money to
maintain a bank account.
Even for the middle class, switching to an all-cash
lifestyle isn't completely radical.
"You can live with just cash and live more locally,"
Rohrbaugh says. It's done regularly in rural areas. That means
shopping at a local merchant rather than going online. But,
Rohrbaugh notes, "there are little difficulties that will just
drive you nuts, like renting a car."
That has been the experience for Kim Tracy Prince, 42, a Los
Angeles area blogger for Mint.com, who went credit
card-free on Nov. 1 and is working hard to curtail debit card
use (www.mint.com/blog/). Prince admits it was a great
relief to know she shopped at Target using cash and is
unburdened by what's hanging over the heads of tens of millions
of others who paid using plastic.
She says she has shifted some online purchases to local
stores and finds that being in her community makes it easier to
keep to a cash-based spending plan. "I can just stay here,"
Prince says. "I go to the grocery store. I go to the gas
station. I take my kids to school."
Traveling, on the other hand, will be an issue, she says.
"How would you even go about purchasing a plane ticket with
cash?" Prince wonders.
One tactic for buying online without a credit or debit card
involves using the online service PayPal - although
consumers must provide that company with bank account
information. Another means of spending without connecting your
identity to your transactions is to use prepaid cards branded by
a major credit card issuer such as Visa or MasterCard.
"Most car rental and hotel companies do accept prepaid
cards," says Brenda Gilpatrick, an Atlanta-based marketing and
prepaid card expert. The catch, she says, is they typically tack
on an extra 15 percent as security, then return it to the card
later if there are no problems.
WHAT YOU GIVE UP
For some personal finance experts, making the move away from
traditional plastic just doesn't make sense. "Sure it can (be
done). But why would you?" asks Greg McBride, senior financial
analyst for Bankrate.com. "Consumers are not liable for
unauthorized transactions on credit or debit cards as long as
it's reported to your financial institution. However, no one has
your back if cash is lost or stolen."
Federal law protects consumers from being responsible for
fraudulent transactions on their credit card accounts.
Some other things sacrificed without a card include not
being to pay for something in an emergency and losing out on
rewards - something only of value to those who pay off their
credit card balances each month and avoid interest charges.
While Hoffman says her decision to ditch credit cards and
mostly avoid using a debit card was right for her, "it's not for