Credit Cards ~ They Don’t Work for Us
I have hesitated writing this post for many months because I know that people have strong opinions on the subject of using credit cards. I believe that most of us would agree that having a credit card and carrying a high balance that you are unable to pay off is a bad thing. Some people believe that credit cards are okay, as long as you pay them in full every month. Some people, like Dave Ramsey, think they are bad, very bad.
I have to agree with Dave on this one. For several years we had a credit card that we used for all our purchases, and paid the balance in full each month. We thought we were really outsmarting the credit card company because we were earning cash back each year and paying no interest or annual fees. What we didn’t realize was that using that little piece of plastic was allowing us to overspend in almost every category in our budget. We were not in credit card debt, but we didn’t have much in our savings account either.
Last year we stopped using our credit card. At first I was apprehensive because the year before we had earned $400 cash back from using our card. I felt like we were giving up free money. We decide to pay for all our purchases with cash. It only took one trip to the grocery store for me to realize the power of paying with the green stuff. I was almost in a panic walking down those aisles, knowing I only had a certain amount of cash in my wallet. I stuck to my list and didn’t even look at things I did not have written down. When I was using my credit card I wasn’t as concerned with the total amount. Certain months, when our bill was a little high we would tell ourselves that we needed to spend a little less next month, and we did, but we never got ahead.
Studies show that over 70% of people do not pay their credit card balance in full every month. Studies also show that people spend 12 to 18% more when paying with a credit card.
So, what were the results of my ditching the credit card? I didn’t earn $400 cash back this January. I did however pay off $11,000 in student loans last year and we increased our savings account balance by over 500% .
Credit Cards- they don’t work for us!
You can find more Works for me Wednesday here.
Thanks for sharing this. Funnily enough, I wrote about credit cards today too. They don’t work for me either!
Thanks for the new spin on the credit card issue. It was interesting how you pointed out that even if you are paying it off every month, it can still be a problem.
This is exactly the situation we were in and the route we are now taking. We cancelled our cards 2 months ago. It is sooo scary knowing there’s no “bail out” if you overspend. The big plus is we’ve saved more in these last 2 months than we would have in 12 months had we been using credit cards.
Well done on paying off your student loan and mega-boosting your savings!
Thank you so much for writing this. I will apply this from now on. Your discription made it soooooo clear. It is amazing how it is a trap when you don’t even know. ((sigh)) This has been a bad month for car repairs. (((doubble sigh))) I really don’t want to be indebt at all. I want to find a solution and this is going to be one for sure.
Blessings and ((hugs)) my SSiC
In Him<
-Mary
Very sage advice. My credit card is such a ball and chain, and I know the cash back I’m earning is ridiculous compared to what it’s costing me. Even so, I panic a little at the thought of not having that line of credit available in case of an emergency. Good job paying off the loans!
Yup – I agree with you. Although I’ve never had a credit card – I don’t want one. Hubby got rid of his shortly after we got married – and we have done very well for ourselves without them.
I use a debit card. Do you think this is a bad idea too?
When people talk about credit cards, does that mean debit cards as well?
I always seem to misplace cash. Plus, it is so much easier to pay for gas.
When we were first married (1968) soon after we got a GOLD American Express card… how impressed everyone was that this cute young couple had a GOLD American Express… then we got a Master Card, Diners Club, Visa… and had all the store credit cards as well! Oh it was sooooo much fun. Then it hit and we had to pay them all off, what a job that was… we didn’t have Dave Ramsey to show us the way (I think he was probably learning a lot at that time also). We could have done much better with our finances if we would have had Dave Ramsey!! But we survived and own everything we have (which you can go overboard here too)… except our house which at this time is cheaper to rent than purchase. Hopefully people will follow your lead and save themselves a lot of grief. Spend and save the green and throw away the plastic!! Life is stress free and more enjoyable.
RESPONSE TO CANDACE: I’m not sure debit cards replace cash, BUT for a woman getting gas they sure are SAFER! But we get less exercise (because we don’t walk in and pay). Ciao, girls!