3 Ways Life Is Harder if You Don't Have a Credit Card

You give up a lot if you don't have a credit card.

Are you against getting a credit card? Perhaps you're reluctant because you've had some debt trouble in the past or because a famous personal finance personality has convinced you that credit cards are bad.

There are some legitimate reasons to shy away from getting credit -- especially if you don't trust yourself to use it responsibly. But unless there's a genuine risk you'll end up in debt, avoiding credit can have some serious consequences that you may not want to cope with.

In fact, there are three ways you could make your life a lot harder if you don't have a credit card.

1. Building credit can be harder

Credit building is one of the best and most important reasons to get a credit card. They do wonders to help your credit score, as long as you use them responsibly.

Credit cards can also provide a record of a positive payment history if you always pay your bill on time, and payment history carries the largest weight when your credit score is determined. Credit reporting agencies also look at the amount of credit used versus credit available, the types of credit you have, and the average age of your credit when calculating your credit score.

Credit cards are an important type of credit, and you can boost your score by getting a card and keeping your spending level below 30% of your credit line.

Without a credit card, the only way to build credit would be to get other kinds of loans, such as car loans or mortgages. These can be harder to come by. And since these loans are for larger amounts, you're better off trying to build credit with a card before you apply for them.

2. Renting a car is more difficult

Car rental companies take your credit card number when you reserve a vehicle or when you pick up a car at the rental place. If you do not have a credit card, you can rent a car with a debit card. But you may need to make arrangements in advance because not all car rental companies accept debit cards at the time you pick up the vehicle.

If you are using a debit card, the rental company will also put a hold on your account -- usually for the amount of the rental. There is usually a minimum hold amount. If you do not have enough money in your bank account, you won't be able to rent the car. And the hold that is placed on your account can affect your ability to access your own money, which can be a huge problem.

While rental car companies place a hold on your credit card too, this won't impact you unless you are close to the limit on your credit card. You won't be tying up money this way, but rather just limiting how much of your credit line you are able to access until the hold is removed.

3. Reserving a hotel room is more challenging

Like rental car companies, hotels typically accept debit cards but will likely put a hold on money in your account. If you're going on a trip that requires you to both rent a car and reserve a hotel, you could end up with hundreds of dollars of your money tied up.

Now, these inconveniences may be worth dealing with if you can't trust yourself with a credit card. But just be sure you're ready to accept the downsides that come with life without credit.