During the past 30 to 40 years, the handy credit card has become one of the top ways that Americans pay for most of their purchases. But using that kind of payment method comes with certain problems that need to be managed if you’re going to use plastic money.
Personally, I think credit cards are not a necessity like so many others do and that’s what I teach every time I get the chance.
But I’ll get to that later.
7 Credit Card Lies We Believe
However, if you’ve decided that you just have to have a credit card, here are some of the things that you will probably tell yourself and the mistakes you will probably make while using your cards. They will be sure to keep you in perpetual bondage to your debt, just like the friendly credit card companies would like for you to do.
1. I Can Afford the Minimum Payments– I’ll just pay the minimum payment because that will keep me caught up on my bill. As long as I can pay the minimum everything is cool, right? I don’t think about the fact that if I keep paying only the minimum it will literally take me decades to pay off the balance, and I’ll pay about 4 times more than if I had just used cash on my purchases. By the way, that’s only if I quit using the card now.
2. Cash Advance? Just This Once Because I’m In a Pinch– When I’m in a tough spot, a cash advance is a great solution! Yes, I know the credit card company charges a pretty hefty fee for that and my interest rate will probably go up, but I needs me some cash now! I’ll worry about all that extra stuff later.
3. I’ll Only Use My Credit Card For Emergencies– I’ll keep it in my wallet just in case something unexpected happens. I’ll use it only if I absolutely have to. That theory works OK until you’re a bit short on cash for something you reeeaally want. Then you break down and use it “just this once”. Sure, just this once…
4. I Don’t Have to Look at My Statement– I’m not an accountant. Who wants to keep up with all those numbers? I really don’t understand it all. Besides, when I see my balance, it’s just depressing. Too bad I never discovered that I got double charged at a restaurant last week and some hacker got my information and bought $1500 worth of Harry Potter memorabilia on Ebay.
5. I’ll Just Use It So I Can Get The Rewards– Intellectually, I know that rebates and airline miles are just marketing tools to get me to use the card more often, but I’ll game the system because I’m smarter than those people at the credit card company. Seriously, I really need a “earn” a plane ticket for my summer vacation so I can get away and forget about all of my debt problems!
6. I Won’t Exceed My Credit Limit– At least not for a good reason. I’ll only exceed it if I have a big emergency or if there is a blowout sale on those awesome shoes I want. All those extra fees and increased interest rates would be seriously worth it if I can just put my feet in those cool shoes. Besides, I got the shoes on sale, so that evens out all those extra fees, right?
7. I’ll Never Make a Late Payment– I’ll never put off paying because there’s not enough in my bank account. Anyway, if it’s the end of the month and I’m out of money, I’ll just pay that payment with my other card that has a later due date and catch up later. Problem solved!
These mistakes, if you use credit cards long enough, are ones you can end up making at some point.
The end up burying you ever deeper into a black hole of debt that will keep you in perpetual bondage to the almighty credit card companies.
I used to tell myself these exact same lies when I had credit cards. I’m also guilty of making some of these same mistakes. But eventually I finally woke up and realized that using credit, no matter what your intentions are, will always put you at a financial disadvantage.
Using cash is always better, period.
Even if you have enough discipline to use credit cards in a way that you never incur a fee and never carry a balance, studies have shown that just the act of using a credit card is so easy and frictionless that you still spend about 12% more than if you had just paid cash in the first place.
Here’s my take if you didn’t figure it out already: I think credit cards are for suckers.
They are marketed to us so efficiently that it’s very easy for us to start believing the lies. We like to tell ourselves how “responsible” we will be when we use them.
But in the end, I think the most responsible way to use a credit card is to just not use one at all.
I’ve been credit card free for years now, and it feels great!
Dr. Jason Cabler is a Christian personal finance blogger, author, and speaker. He teaches how to get out of debt and live a debt free lifestyle through his Celebrating Financial Freedom blog and self study course. His new book “How to Budget- The Quick and Easy Guide to Making a Budget That Works” is now available (more info here). He can be reached on Twitter, Facebook, and Google +.
Source: Care One Credit