For the record, I am not against credit cards. They are not immoral or unethical, and I am not against banks or the people who run or work at them. I use a couple of very large financial institutions for my banking, investing, and retirement accounts. If you want a credit card you can go ahead and get one. I won’t stop you or think less of you. In fact, you can almost get as many as you want. Credit cards are so popular today that the toy cash registers for kids include one! Nothing like getting them hooked at a young age. Candy cigarettes, anyone?
Credit Cards are Convenient
Credit cards make purchasing things convenient for us. They make it so we don’t have to stand in line as long because there’s no change that needs to be given back. They make it so you don’t even have to have the money to purchase something. How convenient is that?
The unfortunate part is that convenience makes you broke. Convenience causes you to buy more things, and banks know this. Merchants know this. They wouldn’t offer a credit card or accept credit card payments if they weren’t helping their bottom lines. Banks and merchants even reward you for using their credit card. Do you really think they are losing money at this? Do you really think they are doing this to help you out? The reality is when you use a credit card you spend more, and when you use a credit card that gives you rewards you spend more, too. This is no coincidence. Banks and merchants make money from people who use credit cards. If they didn’t, they would not offer them.
There is minimal pain registered in your brain when you purchase something with a credit card as opposed to paying cash for it. This causes you to spend your money without thinking about it.
Debit Cards are also Convenient
For people who are not in debt and have their 3-6 months emergency fund saved, I won’t argue with you about having a credit card. Be mindful of your purchases. You know where your money is going when you stick to your budget. I will tell you that you don’t need a credit card to live. A debit card can be used, and this guarantees you that you have money for the purchases that you want to make. No one becomes wealthy from their credit card points, but the opposite is true. People become broke because of their credit cards.
Some people are afraid that they can’t travel with their debit card. I have personal experience that you can. My family recently got back from one vacation where I purchased airline tickets, a two-week rental car, and rented a house on Airbnb, all with my debit card. I have also purchased additional airline tickets and a rental car for another upcoming trip. I have not had any problems living my life using my debit card.
Credit Cards are Part of The Problem
If you have debt and don’t have your emergency fund in place, get rid of your credit cards! The credit cards are part of your problem. Most likely they were the initial step that got you started with the financial mess that you are now in. Think about it for a minute. What got you in your financial situation? Was it because you saved too much money? No! It was because you spent money you did not have. You put it on a credit card because it was convenient for you, and in some situations, people with large debt loads continue to operate like this. They never get out of debt because they have a credit card. It’s a crutch you keep around “just in case” an emergency comes, but having that crutch keeps you relying on it, even for everyday purchases.
If you want to get serious about attacking your debt, you need to get rid of your credit cards. You need to change your behaviors, and not having a credit card takes away a lot of convenience factors that are causing you to stay broke. Your friends call up and ask if you want to meet them for dinner, and even though you know you don’t have money in your bank account you say yes because you have a credit card. There’s a sale at your local store, and even though you do not have the money in your bank account you go on a shopping splurge because you have a credit card. You have to stop this cycle. Getting rid of your credit cards can help you.
Whether you are in debt or have no debt, if you are not reaching your financial goals, see if the problem is because of your credit card. If that is the problem, then get rid of it. Cut it up, close it, and pay it off using your debt snowball.
The bottom line is that you do not need a credit card in order to build wealth. Having a credit card can hinder your wealth-building goals. The best thing to do is to close your card and pay it off.