Over the past few decades, the almighty credit card has become the default way that the majority of Americans pay for their purchases. However, with that method of payment comes certain difficulties that you have to be able to manage if you decide that you want to be a user of convenient plastic.
But I’ll get to that later.
Your Very Own Credit Card Lies
However, if you’ve made up your mind that you just have to have a credit card, here are the things that you’ll tell yourself and the mistakes you’ll make when it comes to using those cards that will ensure that you stay in perpetual bondage to your debt, just like those credit card companies want you to do.
- I’ll Get a Cash Advance Just This One Time- In a tough spot? Getting a cash advance is a great solution! Yeah, the credit card company charges a fee for that privilege and they’ll raise my interest rate, but I need cash now! I’ll worry about all that extra stuff later.
- I Hate to Look at My Statement- What am I some kind of accountant? Who wants to look over all those numbers? I don’t totally understand it, and besides, it’s just depressing. Never mind that I got double charged at that restaurant and some hacker got my info and bought $500 worth of Star Wars memorabilia on Ebay.
- I Can Afford the Minimum Payments- I’ll only pay the minimum payment because that will keep me current. As long as I can afford the minimum everything is ok, right? Never mind the fact that if I keep paying only the minimum it’ll take me decades to pay it off and I’ll spend about 4 times more than if I had used cash; and that’s only if I quit using the card now.
- I’ll Use a Credit Card to Get Rewards- I know that airline miles and rebates are just enticements to get me to use the card more, but I’ll game the system and use it to my advantage, because I’m smarter than those people at the credit card company. Besides, I need a plane ticket for my vacation this summer so I can relax and forget about all of my debt problems!
- I’ll Never Make a Late Payment- I’ll never put it off because there’s not enough in my bank account to pay the payment. Anyway, if it’s the end of the month and I’m out of money. I can just pay that payment with my other card that has a later due date. Problem solved!
- I’ll Never Exceed My Credit Limit- At least not for a good reason. Only if I have a real emergency or they’re having a blowout on those awesome shoes I want. That’s an emergency right? All those extra fees and an increased interest rate would be sooo worth it to have my feet in those cool shoes.
- I’ll Only Use it For Emergencies- I’ll keep it handy just in case something happens, only if I absolutely have to use it. That’s good, until you’re a little short on cash for that thing you really need, whatever it is. Then you break down and use it “just this one time”. Yeah, right.
You Need a Plan
Using credit cards to fund your life is usually indicates a lack of planning. That means making a budget and having a plan to eliminate debt.
I wrote a short, easy to understand book on how to do a budget that works. You can check it out here.
If you’re ready to change your financial life in a really big way, you can take my online get out of debt course. You can learn more about that on the course home page.
Time To Tell The Truth About Credit Cards
These are all mistakes, that if you use credit cards long enough, you’ll probably end up making at some point, digging you deeper and deeper into a pit of debt that keeps you enslaved to the credit card companies perpetually.
I used to tell myself these same lies when I had credit cards. I also made some of these same mistakes, but finally I woke up and realized that using credit, no matter how well you do it, always puts you at a disadvantage and using cash is always the better way to go.
Even if you use credit cards in a way that you never incur a fee and never carry a balance, studies have shown that the transaction is so easy and frictionless that you still end up spending 12% more than if you had just paid cash.
Let’s face it, credit cards are for suckers and they are marketed to us so well that we begin actually believing the lies. We tell ourselves how “responsible” we’ll be when using them, but when it comes down to it, the most responsible way to use a credit card is not to use one at all (here are some alternate uses).
Question: Have you ever told yourself any of these lies? Tell me about it in the comments.