Over the years it’s been ingrained in me that we always need to have credit cards. I’ve been told I needed a credit card to improve my credit, get certain types of credit, and even needed a credit card to pay some of my bills. If I got rid of all my credit cards, could I live a normal life? The answer is yes!
- Credit cards create debt
- Credit card points lure in bad spenders
- Credit card myths
- Commit to being different
- Set a budget
- Final thoughts
Credit cards create debt
This is most certainly true for most people. Having credit cards is a surefire way of creating unwanted debt. It’s like trying to quit eating bad food but always having candy on the kitchen table. It’s a constant temptation!
According to Discover, the average family has well over $16,000 in credit card debt. Can you imagine the constant monthly payments and interest charges being added to that credit card balance? If you’re part of this statistic, then you know exactly what I mean.
Having credit cards gives you the superpower of spending more than you actually earn. It’s easy to go swipe for an item when you have $0 in the bank account. And immediately after swiping, you’ve just created more consumer debt. Easy as that!
If you got rid of your credit cards, you’re eliminating that constant temptation and stops you from digging a deeper hole! Always remember that creating credit card debt robs you from being wealthy
Credit card points lure in bad spenders
I myself love the idea of credit card points. As a matter of fact, I have the Chase Saphire Preferred credit card just so I can rake up travel points. I earn loads of points by spending money I would have spent otherwise. This unfortunately isn’t true for most.
If you ever carry a balance into the next month without paying it off, then credit cards might not be right for you. Justifying having a credit card for points is only valid if the credit card is paid off in full every single month.
Whenever you carry a balance, the interest you pay will that balance is almost always not worth the points you receive. Using credit cards for points should only be done by those that use credit cards wisely and never carry a balance.
If you do spend with credit cards but carry over a balance, then you might consider getting rid of them. This might actually end up saving you more money in the long run by avoiding interest charges.
Credit card myths
Just like any urban legend, there are credit card myths floating out there. These are general misconceptions that people have regarding credit cards. With these misconceptions, most people justify having a credit card for various reasons.
We live in a society that is completely addicted to credit cards. It’s so easy to get a credit card and justify having one. I mean, everybody has one right? So might as well.
If you’re very good at managing your money, then yes it can become very rewarding. However, if you are bad with money, then it will turn into a financial curse.
Let’s go over the most common myths that people believe about credit cards.
You need a credit card for emergencies
This one is absolutely false. If you’re in an emergency, and you put yourself into debt because of it, it only makes matters worse. In some instances, especially when it comes to medical emergencies, much worse.
Sure, it might sound like an easy way out. Just swipe your credit card when you are in an emergency and you’re good to go. Unfortunately, the debt stays with you. You still have to pay it back, and if you have a high-interest credit card like most, then it ends up costing you much more.
You need a credit card for a good credit score
If I had a dollar for everytime I heard this one, I’d probably be a millionaire. Okay, maybe $1,000 in the bank 🙂
Let’s get one thing absolutely clear. You do not need to have a credit card to build good credit. They are so many alternative ways to build your credit. Here are a few examples of how you can build your credit score without a credit card:
- Getting a credit builder loan ($300 – $1,000 loan)
- Reporting alternate payments (like rent payments)
- Getting a Secured credit card (you pay the available balance in advance)
- Becoming an authorized user of someone else’s credit card that has good credit
These are just a few most common ways. So be careful not to be fooled into having a credit card just to build your credit. You definitely do not have to.
You need a credit card to pay some bills
At one point, I also believed this and misconception. Whenever I went into some stores or attempted to pay some bills, the website portal would request a credit card.
Whenever I saw that, I assumed that the merchant only accepted credit cards. This could not be further from the truth. In most cases, they just call all cards credit cards because credit cards are more common. So don’t get confused by the terminology used.
I personally have never seen an establishment refusing debit cards over credit cards. The machines and websites all work the same way with both types of cards. So don’t worry, you can still make all your purchases just the same with debit cards.
Your credit card is safer than a debit card
If security is a concern of yours, you can rest assured that debit cards are just as safe as credit cards. For the longest time, credit cards did indeed have some benefits over debit cards when it came to security. That’s simply not the case now.
In this day and age, debit cards offer the same kind of protection from fraudulent activity. Sure, it’s a bit scary that scammers and hackers will have a direct line into your bank account, but whenever you report fraudulent activity, the bank will refund any fraudulent funds and lock down your account while it’s being investigated.
If your reason for having a credit card is just for security, and if you ever carry a balance, then it’s simply not justified. You can contact your bank and have them explain the security benefits of using a debit card. Chances are, your debit card is just a safe.
Commit to being different
Chances are after reading this you realize that it’s really not that necessary to have a credit card. Well, now what?
If you want to get out of credit card debt, then immediately commit to being different. This means grabbing all your credit cards and start cutting them up. It’s definitely going to feel weird at first, but it’s the first step into your journey to becoming debt-free.
Set a budget
Now that you can’t rely on your credit cards for random spending and emergencies, it’s time you said a month-to-month budget.
Having a budget protects you from unexpected expenses, and allows you to manage your money better. Since you are only spending how much you’re earning, then it’s important to make sure that your spending is under control.
If you have any credit card debt, and do you want to escape from it, then the first step is to remove the reason you got into debt in the first place. That is by destroying all credit cards.
It might seem extreme, or even a bit weird, but if you don’t take drastic steps you’ll just always remain trapped. It’s a vicious cycle and one that requires huge sacrifice to escape from.
Once you get rid of all your credit cards and pay them off, you can rejoice! From that moment on, you will never have to pay credit card interest and fees to the banks. Now you will have complete control of your own money! Congratulations 🙂
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