With this post, I wanted to expand some more on why I don’t want to play into the credit card and credit scoring system anymore. I don’t think it’s stupid to use a credit card if you want to use one and it’s not costing you money. There are just facts and there are opinions. It is an opinion that a credit card is a financial tool. It is a fact that credit cards are just another way for the bank to make money.
I understand where people are coming from when it comes to getting points on their cards, I really do. Free stuff is exciting. But that is exactly my point: if the rewards you get for using your credit card change your life, you are broke. It doesn’t matter what kind of reward it is.
Being broke isn’t evil – it’s just normal. And being normal sucks. So let’s go more in depth, yes?
First of all, if someone tells you every single day of your life that you’re the ugliest person on the planet, it doesn’t matter if the exact opposite is actually true. Until someone tells you otherwise or you finally decide to start thinking for yourself, you’re going to think you’re hideous.
It’s the ugly duckling story all over again. Credit cards work the same way. Debt products are some of the most aggressively marketed products on the planet. If we are told our entire life that they are great and necessary and ladders to success – it doesn’t matter that it’s an illusion and propaganda spread by the companies to create dependency on their product. To challenge this line of thinking would be to challenge the very foundation our financial lives are built upon. People get so angry when you disagree with them, and they get angry because when you don’t agree with them, you are basically telling them that they are wrong, and perhaps even stupid. There is no reason to get bent out of shape. Part of being an adult is getting to make your own decisions and manage your money however you want. If you want to use a credit card, why does it matter what anyone else thinks? What I’m finding the more I look into this is that credit cards are unnecessary, and you can live without them.
The truth of the matter is, they give you “benefits” so that you will use their product more. If they didn’t give you anything, you wouldn’t use it. And then they would be broke – like most people.
I refuse to let some number determine my worth. When my credit score was a 770, I had a negative net worth, and I certainly wasn’t responsible with money. Around the comment sections of certain articles I’ve seen people say things like “a credit card gives you free money” and “my free travel points come in handy.” For simplicity’s sake, let’s just assume those people are responsible. The average yearly cash back amount for most people is just a couple hundred dollars, and let’s ignore the fact that most people are paying 4x to 10x times this much in interest, at least. To get more than that, you need to spend tens of thousands of dollars with your cards a year.
It goes back to my main point. If $250 a year or a new $100 bike or a free round trip to Washington changes your life, you are broke. If you can’t pay for your own trips, then you really don’t need to travel so much. Is it exciting? Sure it is or we wouldn’t charge so much on our cards to get it. But honestly, the credit card issuing company is banking tens of thousands of dollars off of your spending. It’s not designed to give you money, it’s designed to get you to spend more money with their product. And like I’ve said before, carry a balance or spend more money than you would have otherwise just one time, and there go your “rewards.” That alone made me not want to use my card anymore.
Again, I understand it’s exciting. But this is the equivalent of someone making you $500 on an investment, and then you turn around and give them $5 for their trouble. That’s not exciting. But hey, it’s $5 they didn’t have before. Another example – someone makes you $10,000 so you reward them with a $100 gift card. That’s nice, sure, but wouldn’t $1000 have been a better reward? Wouldn’t $3000?
I mentioned little bit about renting a car in my last post, but I wanted to expand on it here as I did look this up in particular before I cancelled my card. In most cases, it isn’t a problem, especially if you’re booking in advance and paying in advance. Worst case scenarios: they may do a credit check, they may call your bank to confirm you have more than $5 in your account, they may call your auto insurance company or ask to see proof of insurance, they may put a larger hold on funds in your account (and they do the same with credit cards, by the way). But any concerns you have can be addressed by calling ahead.
The biggest lie I’ve run into is that “debit cards aren’t as safe.” I had fraud on my debit card earlier this year. You know how much money I lost? NONE. You know why? By law, any card that carries the Visa or Mastercard logo comes with 100% ZERO LIABILITY. The only downside was that it was my money on hold for a week instead of the credit issuer’s money while my bank looked into it and credited my account back. It was about $55. If that was all the money I had in the world, that would be a problem. But guess what? It wasn’t. So it was just annoying.
Go look it up on Visa and Mastercard’s websites and see it for yourself if you don’t want to believe me, your bank, or the millions of other people who get their money back when there is fraud on their checking account. If you wait months to do something about it because you weren’t paying attention to your money and you don’t get your money back, that’s your own fault. Pay attention, call them if they don’t catch it, and move on with your life while the bank takes care of it. Your bank cannot issue you a debit card with a Visa or Mastercard logo on it unless they comply with the credit company’s rules of use.
Like with anything, knowledge is key. Before I cut up my credit card, I researched my concerns, talked to people in the specific industries, and weighed out what I thought I was losing by giving up my credit card points. The truth is, no amount of credit card “rewards” can pay back the amount of money I’ve lost over the years to fees and interest, not to mention all the stress. I personally found no benefit to keeping my credit card. So I axed it.