However, going cash-only or even just using your debit card does have some disadvantages. For example, if your cash is stolen, it is most likely gone for good. Fraudulent transaction committed on a debit or credit card can be tracked and rectified by the banks and credit card companies. In addition to that, you might miss out on perks, like frequent flyer miles. But the biggest issue with forgoing credit cards completely is that it hinders your ability to build up credit.
Now there are a million reasons why you need to have a good credit history. It could affect your ability to purchase a home, get an affordable cell phone plan, or even get hired. Good credit is a measure of your character and how well you do at paying back loans and managing your spending. Banks and other organizations are less likely to take a chance on individuals who have no credit history.
What If I Have Poor Credit
If you have a bad credit history, it's important to do everything possible to right the ship. Obviously you'll want to reduce your debt, but you shouldn't cancel your credit cards as this will hurt your credit utilization. If you don't have a credit card, it might be a good idea to look into getting a Visa secured card to help you develop a positive credit history.
A secured card is a credit card used to rebuild credit. Because it is secured, there are less stringent requirements than there are for unsecured credit cards. However, unlike prepaid debit cards, secured credit cards do report to all three major credit bureaus so your prudent spending and on-time payments will pay off.
Therefore, if you are trying to reduce your debt, cash-only spending can be a good idea. However, don't completely write off credit cards as this could impact your credit.