You can live a nice simple life without credit cards, and I say that from experience. I personally feel a lot more at ease when I am spending money that I have earned or that is truly mine.
The balance on your credit card is the property of the credit card company/bank that issued it in your name. You are in fact borrowing money that you have to pay back with interest.
There is no such thing as free money and missing payment deadlines just adds to the burden. Ever since these golden tickets called ‘credit cards’ were born, the number of people who file Chapter 7 Bankruptcy every year keeps skyrocketing.
Credit Cards Urge You to Spend More
Generation X, Y, and Z have fallen victim alike to the laminated plastic because it appears to be an extra source of wealth. Things like credit points and ‘added benefits’ on purchases are usually not worth the interest rates and maintenance fees you will bear later.
Frankly speaking, credit cards are the death of shopaholics; if you cannot fight the urge to buy everything that catches your eye, then carrying a credit card is dangerous and unhealthy for you.
You will spend more than you earn, and unpaid bills will keep piling up. The saddest part is that the debt you are later forced to pay off is double the amount you should actually be accounted for.
Fraud and Theft
People addicted to credit cards often rave about its portability and convenience. I agree that it takes up less space in the wallet, but isn’t it easier to lose as well?
Cash may be hefty, but you do not normally carry a lot of it and it is quite noticeable if you do. When someone says that credit cards save your money and prevent theft, I cannot help but chuckle. To be honest, they are the main reason identity theft and E-fraud has become so mainstream.
I know you can immediately report a lost card and block it, but what if you are too late to discover that it has gone missing? Hackers can track your info and sweep your card balance within minutes, so I don’t buy the ‘financial security pitch’.
When Credit Scores Matter
Apparently, you will require a good credit score when you are initiating a mortgage, applying for a loan/lease, or buying insurance. You attain a good credit score when you maintain a balance on your credit card and make monthly payments before deadlines.
It also helps if you do not opt for the lowest payment plan because when you choose to deliver the smallest installments, you are in fact paying greater interest rates over a longer period.
If you never own a credit card, you will have no credit score history to prove your reliability. You shall have a hard time convincing the third party to lend you something and subsequently charge reasonable interest rates.
Whether credit cards are plain evil or a necessary evil, depends upon your spending habits and lifestyle. Keeping one credit card doesn’t hurt if you use it well or think of it as the last resort in case of an emergency.
Budgeting is mandatory in any case, and you should always select the shortest payment plan to reimburse spent credit. When you pay back a large chunk or the entire outstanding amount on a monthly basis, you get off the hook with negligible interest rates.
John Adams is a paralegal who writes about widespread legal and social issues. He helps readers overcome challenges and solve many personal problems the smart way, rather than the hard way. He aims to reach out to individuals who are unaware of their legal rights, and make the world a better place.
Thanks for reading, please let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.