Why Credit Cards Are a Terrible Idea

Credit cards have become so normalized that we’ve been convinced you can’t live without them. We believe the lies. “You need a credit card so you can build your credit score.” “You should have a credit card to take advantage of all the rewards; it’s free money.” “Credit cards are safer.” “Credit cards are a great wealth building tool.” And now here we are in 2019 and the average person owes $6,483 in credit card debt with an average interest rate of 16.86% according to recent data. This is shocking considering our grandparents and great-grandparents did not purchase anything they couldn’t pay for in cash. Debt was considered shameful. Now, it’s just become a way of life.

Unfortunately, the credit card way of life is leaving so many people stressed out about their finances, living from paycheck to paycheck, and struggling to put any money into savings. Proverbs 22:7 says “The rich rule over the poor, and the borrower is slave to the lender.” People’s paychecks come in and go right back out because the money is already promised to the lenders. Debt causes people to live in the past, to continue paying for purchases long after it should be done and forgotten about it. Debt causes people to be enslaved to someone else, with no choices, no room to breath, and no space for God to step in and do something amazing through their finances to bless someone else.

Related: Why You Need to Break Up With Debt

My husband and I have been living without credit cards for a little over 18 months now. We know what it’s like to live on credit cards. We fell for many of the same myths everyone else does. But we also know it’s possible to live without credit cards. And not only is it possible but it’s freeing.

Credit Cards Are a Bad Idea

Credit Card Myths

Myth: I need a credit card so I can build my credit score.

Truth: You don’t need a credit score when you pay for things in cash, and therefore, you don’t need a credit card.

One of the first myths we’re told to believe when we enter into adulthood is that you need a credit card so you can build a credit score. And while that is true, the point is, you don’t need a credit score. All a credit score does is describe your relationship with debt, it has nothing to do with wealth or actually having money. Creditors are excellent marketers that have developed this on going cycle. Go into debt so you can build up your credit score so you can go into debt so you can build up your credit score so you can go into debt so you can build up your credit score….you get the picture. Credit cards are not a wealth building tool, they are a debt building tool.

Myth: I need a credit card so I can take advantage of all the airline miles, cash back, and rewards.

Truth: These “rewards” are just marketing schemes that convince you to spend more. Credit card companies spend millions of dollars marketing to you and you think they’re giving you stuff for free?

Credit card companies are smart. That’s why they are a billion dollar industry. So stop fooling yourself into believing that you can outsmart them or beat the system. The marketing budget for the top four credit card companies for one year is enough to buy 20,000 people each a $200,000 house. And you think they’re giving you stuff for free? It’s all a marketing scheme designed to convince you to spend more. It’s easy to excuse away a purchase when you remind yourself that it’s earning you points or cash back. The truth is most people pay more in annual fees that they redeem in free airline miles. The average cash back amount is 1% which means you have to spend $5,000 to get $50 back and by that point you’ve either paid that much in interest or annual fees, or you spend $50 on something you wouldn’t normally have bough if you were using cash. The same thing goes for rewards, especially store loyalty cards that send coupons or offer a percentage off when you use the card.

Myth: Credit cards are safer.

Truth: Credit cards and debit cards have the same level of fraud protection.

Many people use fraud protection as an excuse to keep their credit cards, but the truth is credit and debit cards hold the same level or protection. In the case of real fraud, you’re going to get your money back in both scenarios. If you’re really, really worried about something like this you can always open a separate checking account and debit card with the sole purpose of transferring money when you need to make an online purchase.

Myth: I need a credit card for emergencies.

Truth: Using a credit card for emergencies only adds stress, you need a fully funded emergency fund (savings) for emergencies.

Emergencies are going to happen, we all know that. You may think you’re being prepared by having a credit card on hand, but you’re only setting yourself up for more stress. When a true emergency situation comes about, you should be able to focus your entire attention on the situation without worrying about the payments and interest accruing. Using a credit card to pay for an emergency means you’re going to be living with the weight of that emergency long after it’s gone. The best way to be prepared for emergencies is to have a fully funded emergency fund, that is 3-6 months of expenses saved, where you can easily get to i,t in something like a money market account. Then when the emergency comes, you simply pay for it with cash, be present in the situation, and then move on when the storm has passed.

Why Credit Cards Are a Terrible Idea

We’ve already debunked many of the myths around credit cards, but let’s discuss them further. Credit cards are not a wealth building tool. They simply enable you to live beyond your means. Living a lifestyle you can’t afford will only go so far before it becomes a major stress in your life. Credit cards were created to remove the pressure people feel when making purchases both big and small. They make you think that if you can afford the payment, you can afford it, but that’s simply not true. It just results in you paying more for something than it’s actually worth by time the interest is tacked on. And, studies show that people tend to spend more when they purchase with a credit card, and even a debit card, than compared to cash.

When you make a purchase with a card, you swipe it and then the cashier gives you both the item and your card and you leave. When you purchase with cash, there’s any exchange. You give the cashier money and they give you the item in return, you don’t get to keep both. That causes you to really feel the weight of the purchase rather than doing so mindlessly.

Related: 20 Ways To Reduce Impulse Purchases

And I know many of you are sitting here reading this thinking “I have a credit card but I use it responsibly. I don’t carry a balance and I pay it off every month. So what’s the big deal?” If you are one of those people, then consider the myths mentioned above and how a debit card can do everything a credit card can do…so why would you play with snakes? It’s just not worth the risk when there’s a safer option that’s just as good. Unfortunately even people that regularly make their payments on time can backslide and wind up paying ridiculous interest rates. Keeping a credit card costs you way more in the long run. You pay more than you should for an item and many times you spend more than you would with cash. If you credit card balance is larger than your bank account balance, you’re broke. Just as Proverbs 22:7 says, you are slave to the lender.

It’s time to get out of debt. It’s time to stop using credit cards. It’s time to stop being a slave to the lender. Your income is your most powerful wealth building tool and when you have so much of it wrapped up in debt payments, it doesn’t leave much to save and build wealth with. Say no to credit cards so you can say no to payments. You know what you can do without any payments? Anything you want.

If you’re ready to kick debt to the curb, here are some helpful posts:

If you’re ready to start paying off debt or you want further guidance in your pay off journey, get my completely FREE downloadable Debt Free Guide. This is a full guide of reading and prompts that gives you the steps to paying off debt in a bite sized format so that you can stop feeling overwhelmed and start feeling motivated!