For five years, Kerry Ward and her husband, Rich, worked to pay off $36,000 in debt, sending $600 every month to a debt management plan.

When they triumphantly unyoked themselves from their credit cards, the last thing they wanted to do was open another one.

"We talked about it, and we were both kind of like, 'No way,'" said Kerry, a mom of two in Glencoe, Minn., who now buys what she needs with her bank-issued debit card, with a Mastercard logo. "I can shop online. It's really no different, except that we essentially pay cash for everything."

The Wards are part of a new wave of people snipping their credit cards and returning to a cash- and debit-only economy after decades of blockbuster growth in credit card use. Their ranks are rising so swiftly that TransUnion, one of the three major credit reporting agencies, declared it "one of the fastest-growing consumer groups in the country."

In October, the agency released a study of its credit accounts and found that in 2009 more than 70 million Americans had active credit cards. In 2010, that number dropped to 62 million.

"In 2010, there was a huge shift of people going from having credit cards to not having credit cards," says Ezra Becker, the vice president of research at TransUnion, who was the lead researcher on the study.

Some have quit for philosophical reasons -- they don't want to pay high interest rates and want to live as debt-free as possible. Others had their cards yanked because they fell behind on payments or couldn't make them at all.

While TransUnion didn't break down those numbers, Becker said a significant portion of the 8 million former users decided on their own to stop using credit. Like the Wards, many rely on debit cards, which look like credit cards but are essentially electronic checks that take money immediately and directly from an account.

It may seem like a streamlined way to live, akin to great-grandpa saving his dollars in a box to buy a new tractor. But debit cards can be mired in just as much jargon and confusion as their credit card cousins.

Hit credit? Or debit?

For one, there's the issue of choosing "credit" vs. "debit" at checkout counters, a rather muddy distinction involving merchant fees, liability policies and the choice whether to get cash back on your purchase. (When given the choice between the two, the short answer is: Choose "credit" for security, "debit" for cash back.)

Higher-risk purchases, such as car rentals, can result in annoying "blocks" where companies put some specified amount of money -- sometimes hundreds of dollars -- in financial limbo, just in case you bring that rented Aveo back without a bumper. Some cyclists discovered this debit drawback last summer when the Nice Ride bike rental company in Minneapolis put a $250 block on debit accounts, sometimes for as long as eight business days.

Many banks offer debit-card users "overdraft protection plans," but consumers have learned to be wary because these fee-based plans can amount to higher interest than even the highest-interest credit cards. After all, a $30 overdraft fee on a $5 venti latte is really a 600-percent micro-loan.

Still, Becker says the sheer number of people who are choosing to shop (or not) with credit cards eventually will change the way many companies, particularly hotels and car rental agencies, do business. "Even now, I would say that if there's a car rental company that doesn't accept debit cards, they're leaving a lot of money on the table."

Decades of growth

The shift from credit to debit comes at the tail end of decades of growth for credit card companies. Just 16 percent of American households in 1970 had a credit card, according to the Survey of Consumer Finances. But then, in the late 1980s, credit reports went automated, allowing card companies to send out their first deluge of "preapproved" card offers.

"We call that the credit boom," says Maxine Sweet, the director of education at Equifax, one of the major credit reporting agencies.

A few years later, hard-and-fast credit scoring was introduced, which allowed card companies to devise levels of risk. "People who had always been turned down for credit actually had access for the very first time, albeit at much higher interest rates. But the downside was, everyone had cards, and so many people got in over their heads," Sweet said.

Though the trend may be tamping down, some consumers are not going willingly into that creditless night.

Since the start of the recession, a number of creditors have stanched the flow of credit by "charging off" billions of dollars in bad debt by pinpointing delinquent accounts and writing off the balance as an unrecoverable loss. The practice has been growing over the past three years and hit record levels in February 2010. Bank of America -- just one of several big-bank lenders -- charged off $33.7 billion in debt in 2009, more than double the amount in 2008.

"When an account gets charged off, what normally happens is that the account is closed," explained Darryl Dahlheimer, program director for Lutheran Social Service Financial Counseling Service in the Twin Cities. "It's an involuntarily thing on the part of the card-holder. Nobody wants that to happen because it's a big black mark on your credit report, you lose your credit cards and you're still liable for the debt."

Some of the 8 million newly cardless also include people who entered into debt-management plans that use third-party groups to negotiate more affordable credit card payments. As a rule, credit card companies require them to give up their credit cards as a precondition of the program.

Pay as you go

Scott and Katie Jensen are among the consumers who gave up their credit cards for philosophical reasons. Two years ago, the Lino Lakes couple cut up all their credit cards and haven't looked back. They got the inspiration from Christian money guru Dave Ramsey, who hosts a popular satellite talk show and podcast, and often finishes his live seminars by cutting up credit cards with a pair of oversized scissors.

"We never got in trouble with our credit cards, but we just decided that it wasn't worth the risk," says Scott, a full-time student at Metro State University and worker at Cub Foods. "There's something satisfying about knowing that what you buy, you pay for."

Alyssa Ford • 612-673-1707