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It’s almost an inevitable question when talking with people who aren’t fully immersed in the FPU plan. When I tell people that I haven’t had a credit card in now eleven years, they have a tendency to say, “You don’t have any credit cards whatsoever?! How do you…rent a car. I hear you can’t rent from most rental car places without a credit card!”
Now, if that’s you, I don’t mean to offend you, but you’re a little behind the times. With what I get to do, I have traveled every year, for the past ten years, more than most people I’ve ever met. (See the Southwest Airlines post to see how many flights.) I say that to then say, I’ve done all of that travel with only two debit cards; a business debit card and a personal debit card. Now, in the early days, it was a little difficult to rent from the companies that charge too much for a car, but why rent from them anyway. The reason they didn’t take debit cards was simple, you most likely won’t upgrade with a debit card. They’ve since realized that they are losing business by not taking them. For the last five or six years, I haven’t found a company that still only takes credit cards.
With that said, there are some things you have to deal with. Most places ARE going to put a hold of a certain amount on your bank account. But again, if you’re following the plan, you should actually have MONEY in your account. It’s usually anywhere from $150 to $300, and it gets removed when you turn in the car and pay for it. At an airport rental place, you most likely can’t rent one way with a debit card without calling first. And, it’s always a good idea to call anyway just to make sure you haven’t found the one branch that’s still stuck in the past. (We almost never actually call and I still haven’t had a problem.) Other than that, it’s the same as with a credit card. The world is changing my friend. The more people refuse to use credit, the more companies will pay attention!
Chris, I do have a scenerio recently experienced and am curious what you all would advise. I have a client (doctor) that has purchased a practice that has been in business 24 years. He is not out of debt and is not following The Baby Step principals. In fact he has a very poor situation with bankruptcy 6 years ago. I am setting up his practice from the ground up. I know none of this follows the “Dave Plan” but wondered how you would advise a business owner in regards to credit. How do you help someone when you have run into issues getting him a bank loan, credit card machine, vendor agreements, utilties when he has poor credit? I know Dave would say he shouldn’t buy the business if he can’t pay cash for it, and he can’t. I know Dave would say operate the business without credit cards, and he won’t. Do you feel credit is a good thing in the business world? How would he establish these things with no credit? Maybe this can be a blog post?
Hey Chirs,
This is ALWAYS the first thing I hear when credit cards come up on the first night at FPU and where I see the most push-back. I am going to print this post and hand it out.
Thanks!
Great post, Chris! I have traveled internationally for the last two years using nothing but my business debit card. I always have my personal debit card with me in case of a problem (generally a declined transaction because I forgot to notify the bank of international travel), and I also carry a bit of cash. I think the biggest hurdle for people is just trusting that the debit card works just as well as credit – that is, if you actually have money. I have never had anyone question my card – if a hotel or rental car place asks for a credit card, I just hand them the debit and no questions are asked.
I have also heard the argument that people use regarding credit cards and so-called rewards points. If you are married to the points idea, find a check card that gives you points. I have a business check card that gives me airline miles for every signature transaction. That simply means run the card as credit rather than debit – you don’t have to punch your PIN, and the money still comes straight out of the checking account. I have used airline miles for 8 tickets in the past two years, so this is a great deal for me!