Many of our great g rand parents actually thought debt was a sin! Our grandparents generally thought that borrowing money was just a bad idea. Our parents started borrowing money for major purchases such real estate and automobiles, and now we are going into debt for things as small as a $1.29 soda’s at the gas station! The amount of consumer credit that we are making use of is astonishing. 6 billion credit card offers are sent out every year! Credit cards are everywhere, but are they really a tool that can be part of one’s healthy financial life? I don’t think so.
Credit cards serve no other purpose but to get you in debt on a regular basis and keep you there. They allow you to borrow money for your every day purchases and let you pay them back at very high interest rates, over a period of decades! Why would anyone want to make use of a product which does nothing but put you in financial servitude for a long period of time?
This is where some financial sophisticates will come in and disagree. They will tell you can pay it off at the end of the month, and accrue interest by using other people’s money! They will also go on and tell you about how they are getting free money from their rewards programs.
Credit card companies spend millions on research each year to figure out how they can get more money out of you, do you really think you can beat them at their own game? They know that more often than not you won’t pay your balance off at the end of the month, and you won’t make full use of that great rewards program. Instead they will look for every possible way to charge you a “gotcha” fee. Even if your payment is a minute late, they’ll charge you upwards of $40 for a late fee. Many major banks have even been accused of holding payments until past the due date so they can charge you bogus late fees. They’re snakes and eventually you will get bitten!
The rewards programs they offer usually are not worthwhile. Usually you have to spend a great amount of money before even breaking even with them. For one of Wells Fargo’s programs, you have to spend $5,000 a year just to break even on the fee to be part of the rewards program! These banks make it very difficult to use the rewards points, it could be decades before you accrue enough money to get that free iPod! Even if you make a few dollars here and there on your rewards program, who cares? Kiplinger’s Personal Finance tells that on average consumers will unconciously spend 10% to 20% more on their purchases if they pay with a credit card compared to cash. The reasoning for this is that when you pay with cash, it hurts and you feel it! With credit cards, that doesn’t happen, so you spend more whether you realize it or not!
There’s only one thing that a debit card cannot do that a credit card can, and that’s to get you deeply in debt at a very high interest rate. Don’t play with snakes. Don’t use credit cards.
I’ve been using an amex blue cash card for 2 years now, and I’ve gotten over $100 in cash back and never paid them a dime. There’s no fee for the card, and I get automatic email updates to remind me to pay my bill, so the chances of me being late on a payment are basically zero. Tell me again how I’m ruining my financial future by using credit cards?
Another advantage of credit cards over debit cards is that if someone steals your card number, they can’t wipe out your checking account. If someone uses your debit card fraudulently, you don’t have any money until the bank sorts it out; if someone uses your credit card, you’ll show a fraudulent balance on your account until the bank sorts it out, but you still have all the money in your checking account.
Credit cards can certainly be dangerous if you use them to spend money you don’t actually HAVE, but the idea that everyone should cut up their credit cards is just absurd.