You’ve probably read many opinions about the pros and cons of credit cards.
And that’s precisely what it is.
Opinions born out of personal experiences.
This post is no exception.
And we know there’s no shortage of companies and individuals who promote the benefits of credit cards.
The thing is though, almost always, they have a vested interest in doing so.
They earn a commission when we purchase goods and services through their recommendation.
They don’t know what a devastating effect of debt really is like you and I.
So, it’s important we assess the good, the bad and the ugly as objectively as we can to suit our needs and circumstances.
Regardless of what everyone else says, you need to start with one question.
And answer it honestly with either “Yes” or “No“.
Note that “Maybe” is not an option.
Are you good with money?
If you are unsure what it means, here are a few questions that will help you decide your answer.
Think about your past 3 months purchases. Try to be as honest as you can when answering to each question.
No one is judging you.
It’s to assess your spending habits, whether it’s getting out of control or you’re in total control.
- Do you have credit card debts?
- Did you plan for your purchase, spending several days/weeks looking for a bargain and comparing the prices/reading reviews? Or did you buy them straight?
- Did you use the stuff you bought regularly? Or are they stashed away in a wardrobe or garage?
- How many times did you order takeaways or eat out?
- Did you pay the full balance of the credit card bill each month?
Now that you thought about it, let’s ask again.
Are you good with money?
If your straight and honest answer is “Yes”, that’s great.
You’re probably here in morbid curiosity to find out how credit cards can be so bad to dismiss the “awesome” benefits. Ha.
If your answer is “No” though, you’ve got some work to do.
The first thing you need to understand is this.
Forget about the Benefits of Credit Cards
Fixing bad money habits has to come first.
Deep down, you already know this.
Bad money habits and credit cards are BFF.
You don’t want to put them in the same room. They get up to all kinds of naughty stuff and wreak havoc on your life.
From here on, your mission is to break their strong bond (as evil as it might sound. Ha!).
Which means saying sayonara to the “benefits” of credit cards.
You can’t have the best of both worlds: enjoying the benefits of credit cards and living debt-free life.
That’s just not going to happen.
It doesn’t matter how much air mileage you stack up or how much cash rebates/points/rewards you accumulate.
The benefits pale into insignificance when you grapple with mounting debts or bad money habits.
Debts set you back so far in life that (sorry but) you’ll feel like a loser (I’ve been there) and lose your dignity and self-respect.
This won’t go away (not completely) until debt goes.
You may not feel it that way because they’re “manageable” right now.
Everyone started thinking exactly that.
Even if you aren’t in serious trouble now, if we go by your honest answer earlier, you’re likely heading that way.
And you really want to stop that train wreck coming your way.
But Many People Advocate the Benefits…
Remember, they make money from recommending products and services, including credit cards.
And most of those people are very good with money.
Whether owing to their background or a role model they had, somewhere along the way they firmly grasped the right money mindset.
A few may have turned their life around, breaking the bad money habits of overspending or relying on credit cards.
But most financially secure people are sensible with money.
You don’t accumulate a few hundred thousand dollars in saving and investing account while keeping huge credit card debts.
It just doesn’t happen that way.
They know you can’t build wealth while accommodating an inflated lifestyle with a fat balance on your credit cards.
They’ve learned, honed and mastered their money skills.
They don’t have impulsive tendencies.
They’re SO good with money that they can truly enjoy the benefits of credit cards with full control.
You Think You Can Too?
Let’s look at your spending with a fine-tooth comb.
Your current credit card debt strictly belongs to your old spending.
You’re 100% confident you’ll stick to your budget as you’ve done it for the past 3 months.
You’ve made no “silly” purchases during that time.
Maybe just maybe you too can enjoy the benefits of credit cards.
But let me ask you this.
Was there a time you would have spent less had your purchase not allured you with credit card’ rewards/points?
If your answer is yes, you still have some loose ends to tie up.
Remember, it’s a mug’s game to keep spending (and spend more than necessary) to accrue points or cashback WHILE YOU ARE IN DEBT.
So, Let’s Do Us a Favour…
Forget all the benefits of credit cards for now.
Work on paying off credit/store cards debt first.
Once the mission is complete, re-introduce those (few) benefits of credit cards.
I’m certain that living debt-free life far outweighs any benefit of credit cards might promise.
Besides, you’ll realise you didn’t miss much.
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