Wondering if you should get or keep your credit cards? Worried about credit card debt? See if you have any of these signs that indicate you probably shouldn’t be using credit cards.
Credit cards look like an innocent piece of plastic with endless possibilities to buy the life of your dreams. But credit cards, oh credit cards…they can be dangerous. And they can scary. And they can be evil if left in the wrong unassuming hands.
But don’t get me wrong. I don’t think credit cards are always evil. Credit cards can be a good thing, or a really really bad thing.
They can be good because they may help you get travel rewards, keep track of your money, provide security of your transactions, or give you fraud protection.
However, they can be a bad thing. Because they can get you into some serious debt. They can be your partner in crime by helping you live above your means.
Today I’m going to share eight signs that credit cards might not be for you. At least not right now. And for the record, that’s okay. Credit cards aren’t for everyone. They are not a magic pill. They are not going to make you rich. But they can certainly make you poor.
So if you’re showing any of these signs it’s probably time to put your credit cards away for right now. You don’t necessarily have to cancel them, but take them out of your wallet. Put them somewhere special where you won’t be tempted.
Signs you stop using credit cards
1. You’ve got a ton of credit card debt (or only pay the minimum payments each month)
If you are in credit card debt, then it’s sign #1 that you should not be using credit cards. In this case, a credit card is not your friend; it’s your enemy.
Credit card interest rates are some of the highest interest rate you can possibly have. It’s the most dangerous kind of debt, but also some of the easiest debt to get into. It’s going to have the most impact to your financial life and financial future.
If you carry a balance on your credit card from month to month or are in the habit of only paying the minimum payments on your cards, then you should stay away from credit cards.
2. You leave your bills on the table for days or weeks or (worse) months at a time
You don’t actually open your bills. That’s a sign that you have an unhealthy relationship with your credit card. You are just spending what you feel like, when you feel like it.
You may dread every single time you open your mail box…or just avoid getting the mail as long as possible.
3. You don’t know how much you spend each month (you don’t have a budget)
If you don’t know how much you spend each month, then you have no idea if you are spending way way way too much. You don’t know if you are out of control with your credit cards. That’s probably not a good sign. You should know how much you spend each month
This shouldn’t come as a surprise if you are a reader of this blog, but you should have a budget and track how much money you spend each month. It will help you know how much money you have coming in, and how much money you are allowed (have budgeted) to spend. A budget is a permission slip to spend money, or in this case to swipe your credit card.
4. You use credit cards to move your debt around
If you are in the habit of transferring the balance of one credit card to a new credit card, then you have a problem my friend. Face your debt head on instead of kicking the problem down the road.
It’s time to come up with a plan to get rid of your debt, instead of just shuffling it around. Head over to this post on the debt snowball method to learn about the plan that helped me get out of six figures of debt.
5. You have a spending problem
You probably know if you have a spending problem. Do you turn to shopping if you are having a bad day? Do you feel compelled to spend money? Credit cards facilitate bad spending habits.
Related post: How To Stop Your Shopping Addiction
6. You’re hiding purchases
If you have a secret credit card or if you are hiding purchases from your spouse/friends/parents, then it’s probably a sign you shouldn’t have a credit card.
7. You don’t like credit cards
Whatever your reason (maybe you had a bad experience in the past), if you don’t like credit cards, don’t use them. You are not missing out on anything. Don’t feel forced to use it because of the crazy hype of travel rewards.
8. You feel like your money controls you (instead of you controlling your money)
It is very easy to not be in control of your money with a credit card. That’s because you are not in fear of overdrawing your bank account like you are with a debit card or cash.
With a debit card you always know exactly how much money you have in your bank account, exactly how much the item cost, and if you can afford it. That’s not the case with a credit card. So if you feel like you are just out of control with your money and you feel overwhelmed, then stop using a credit card. Use a debit card (or cash). Create a spending log. Take control of your money again.
Is it okay to have a credit card if you are in debt?
My philosophy? Heck yes you can have a credit card if you are in debt. You can have two or three. But you can’t add to the balance because that will increase your debt balance and you are supposed to be going the other way!
If you have a budget, spend according to that budget, pay off your credit card each month, and are putting all your extra pennies towards debt, then yes you can use a credit card.
You can’t use your credit card as a safety net, a fudge factor for your budget, as a something to turn to when you are feeling sad and depressed and need to go on a shopping spree. That’s not what a credit card is for.
If you abuse credit cards, then they aren’t for you. If a lot of your debt is credit card debt, then it’s probably a sign that you shouldn’t have a credit card.
What to do if credit cards aren’t for you? What should you do with your credit cards?
So have you determined that you probably shouldn’t have a credit card? If so, that’s great. You are acknowledging it. You have two options on what to do with those cards:
- Keep the credit card, but just not in your wallet. Put it somewhere where you aren’t going to be tempted to spend money on it. Keeping credit card account open will help your credit score, especially if it’s an old account.
- Close your credit card account. Now you can do this if you know that there is just no way that you can keep your claws off the card. I don’t buy ice cream because I know I will eat it all. Same goes for a credit card. Don’t keep it around if you know you will spend crazy amounts of money with it. Closing an account *may* hurt your credit score. But you know what, who cares? It will do wonders for your financial life not having such easy access to getting into debt. And it’s worth the temporary ding to your credit score.
Alternatives to credit cards
There are two alternatives to using a credit card. Choose the one that best suits your lifestyle.
- Debit card. It looks and feels like a credit card, but it doesn’t allow you to go into debt! When using a debit card, you can only spend the amount of money you have in your bank account. You can’t carry a balance (debt) with a debit card.
- Cash. Spending with cash is completely different than using a credit card or debit card. Physically handing over your cash puts you in a different mindset than swiping a card. Using cash really prevents you from mindlessly spending money and makes you think about each and every purchase. If you choose to use cash, I highly suggest learning about the cash envelope system. This system will help you budget your money, not to mention keep your cash organized (check out these modern cash envelope wallets)
Can you relate to any of these signs that you shouldn’t have a credit card? Have I missed any?