Well, this one is likely to cause some controversy. Whenever I tell people I don’t use credit cards, they look at me like I have demons flying out of my ears. In fact, sometimes it feels like a mortal sin when you attack the idea of credit cards. For whatever reason, people love their credit cards. However, I personally have some great reasons to stay away from credit cards.
Before you get too upset, please realize that these are my personal views. In other words, I won’t hate you if you have a credit card. But I still don’t think they’re a great idea. So, I present to you six great reasons to stay away from credit cards.
1. Credit cards make it easier to spend impulsively
It’s a nice, cool Saturday afternoon and you decide to go to the mall to stretch your legs. After all, it’s nice to relax for a bit after a hard week of work. You have no intention of spending money. However, you pass by a store and you notice their entire inventory is 50% off! Why not go in and look around? Then you remember you didn’t budget for this. But you have that magic card in your pocket. Next thing you know, you’ve got twelve $10 shirts.
As you can see, having a credit card makes it easy to buy something on the spot. You don’t even have to check your bank account before you make a purchase! However, those impulsive purchases can start to add up over time. If you make too many of them, you’ll end up with a pile of credit card debt.
2. Credit cards make it easier to overspend
Okay, so buying some shirts at the mall wasn’t too bad. Your credit limit is small and you paid it off with the next paycheck. After all, you have to start somewhere. But as time goes on, you notice your credit limit gets larger and larger. One day, you check and your limit is $5,000! Just one problem: you don’t have $5,000 in the bank. Still, you have access to the money, so why not go ahead and spend it? Hello, 75-inch TV!
Of course, it’s irresponsible to overspend and to needlessly buy everything on credit. But credit cards reinforce the “buy now and worry later” mindset. By giving you high credit limits, they make it easier for you to go into debt. Moreover, when you go into credit card debt, they get to charge you interest. Just another reason to stay away from credit cards.
3. Credit card interest rates are insanely high
Now you’re sitting in your living room and admiring your brand new TV! While you watch the Cleveland Browns lose in high definition, you decide to pay a few bills. You log in to your credit card account and pay the minimum amount due. Easy peasy! One month later, you check again and you notice another charge. And that charge is the interest. What the heck is the interest rate on this card?! You check it and find out it’s 25%.
Credit cards are notorious for charging outrageous interest rates. For most people, you can expect a variable interest rate of 15-29%. Furthermore, if you rack up a ton of credit card debt, you’ll find it harder to get out with interest rates like that!
4. Credit cards have stupid fees
You turn on your TV and then turn it off. Even though your TV is nice, you feel a little sick whenever you see it. Why? Because you still haven’t paid it off. You check your transactions again and you notice another strange charge. It’s a $99 yearly fee! After that, you notice another. A $39 late payment fee! Previously, you opened up another card to transfer the balance. And what did they charge? You guessed it, a 3% transfer fee.
Credit cards come with some hefty fees. The high-end reward cards are particularly notorious for this. In fact, there are some credit cards that have a yearly fee as high as $5,000!! Tell me again how those reward points are worth it? Sure, they include some perks. But you have to spend a lot to make up for the fees.
5. Credit cards can keep you in a cycle of debt
Your stomach starts to growl and you realize it’s time to grab a bite to eat at Chick-fil-A. As you place your order, you start to thumb through your now-numerous credit cards. You wonder which one still has some available credit for your chicken sandwich. After the cashier tells you the amount, you swipe one of your cards. Declined. Then you grab the next one. Also declined. The third one’s the charm! Nope, the third one’s just as useless. Afterward, you remember the balance transfer offer that came in the mail. Oh, what sweet relief it would be to use your cards again!
Do you see how this could keep you in a cycle of debt? After maxing out one card, you then get another card. Once that card reaches maximum capacity, you get another. Then you open another card because of a balance transfer order. And it keeps going and going. Sure, this doesn’t happen to everyone. But it’s still yet another reason to stay away from credit cards.
6. Credit cards teach you that debt is normal.
At this point, you give up. You’re now under the thumb of your credit cards. However, you don’t want to get rid of them because you can’t afford anything without them. You also start to wonder if other big purchases like a car or a house are within your grasp. But you remember a commercial about how credit cards improve your credit score. You check and find your score is over 800! Score! You realize that you can get a loan for your dream car! Time to go to the bank and get pre-approval for a $30,000 loan!
There’s one thing many people forget whenever they use a credit card. Every time you swipe your card, you borrow money. So, what does this do? It teaches you that it’s normal to borrow money. Coincidentally, this is exactly how the credit card companies want you to feel. So now it doesn’t feel so outrageous to go out and get a loan.
I Recommend That You Stay Away from Credit Cards
As you can see, there are plenty of reasons to stay away from credit cards. Personally, I don’t see much need for them. And yes, I’ve heard all the arguments. Lots of people use credit cards for things like reward points, discounts, and building credit. After all, most people claim to pay off their card every month. However, I’m not entirely sure about that.
With reward points, you probably end up spending more than you would have if you didn’t have the credit card. For the discounts, I guarantee there are other ways to get them. And finally, you really don’t need a credit score anyway.
Here’s the truth: if you use a monthly budget and keep a buffer in your checking account, you have no need for credit cards. Using credit cards is a little like playing with black widow spiders. Eventually, they’ll bite you. Don’t believe me? Then why do 55% of cardholders have credit card debt? I bet many of them started out paying off their card every month, too.
If you choose to continue using a credit card, please make sure you never carry a balance. Also, make doubly sure that you stick to your budget. Otherwise, you could end up with a mountain of debt. As for me, I have plenty of reasons to stay away from credit cards. And I believe you do as well!
If you’re looking for a proven plan to get out of debt and build wealth, I HIGHLY recommend Dave Ramsey’s The Total Money Makeover. This is the plan I personally use and I love it! And yes, Dave will give you even more reasons to stay away from credit cards!
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