The ability to stop using credit cards and successfully pay cash for purchases can be an indicator of financial stability, as it proves a person’s lifestyle is in line with their income, according to the National Foundation for Credit Counseling. 

But a recent NFCC online poll revealed that one in five people could not make ends meet without using credit.  Another 22% of respondents said that if asked to live on a cash basis they would have to make significant lifestyle changes.

The NFCC posed the identical poll question to consumers in 2012.  Comparing the results only revealed one positive change:  the number of people who would be able to maintain their same lifestyle without the use of credit increased 4% in this year's findings (27% versus 23%). There was no statistical difference between the two years in the remaining answers. 

"It is a warning sign if a person is not able to manage his or her daily lifestyle without the use of credit cards, as this is a dangerous habit that could lead to serious financial distress," said Gail Cunningham, spokesperson for the NFCC. "People may feel as though they have no alternative to using credit to supplement their income, but that is a dangerous habit that can lead to financial ruin. No one ever intentionally digs a deep financial hole, but breaking one of the basic rules of personal finance – spending more than you make – is not likely to have a positive outcome."

To illustrate the damage that can result from overusing credit, consider that in 2013 the average consumer who sought financial counseling from an NFCC member agency had between five and six credit cards with a total unsecured debt equal to half of their annual household income.

The actual 2014 poll question and responses are below. The second number is for 2012.  

If asked to live on a cash basis, I:

A.      Would be able to maintain my same lifestyle 27% (23)
B.      Would make some changes, but basically be fine 32% (32)
C.      Would have to make significant lifestyle changes 22% (24)
D.      Could not make ends meet without credit 20% (22)

The NFCC’s August Financial Literacy Opinion Index was conducted via the NFCC website ( in August and was answered by 1,878 individuals.

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