Credit Cards: To Shred or Not to Shred
Darcy H. asks: Can you keep on budget using a credit card? Or should all credit cards be cut up?
Although some people swear they use credit cards as a budgeting tool and don’t overspend with them, I am NOT a big fan of credit cards in any form. Here are a few reasons why I don’t like them:
- Even if you pay them off every month, most people spend 15-20% more with a card than they do with cash.
- You might accidentally miss your due date and get hit with a nuclear bomb in the form of late fees and jacked-up interest rates.
- Even if you always pay on time, credit cards are very sneaky and will often play dirty tricks–like moving due dates, changing terms of service, or “losing” your check to get you to pay late fees or interest.
The only smart use I can see for credit cards is to use a balance transfer to lower your rates on credit card bills or car loans you already have. In that case, you aren’t borrowing any more money, just paying less interest on your existing debt. My family did several balance transfers when we were paying off debt, and it helped shorten our payoff time by several months. But if you do get a new credit card, please don’t make any new purchases with it! The object of this game is to pay it off as soon as possible, not dig yourself into a deeper hole.
Don’t get me wrong, people can and do use credit cards responsibly. But credit card companies are often sleazy and play games that I just don’t want to play. They can keep their airline miles and reward points as far as I’m concerned. I’d rather have peace of mind instead.
Hello – I wouldn’t know how to sell my stuff. Never tried though. =/
Totally agree. Better to shred the card sooner than later. Keeping the card means never having to confront why you are overspending because it’s so “easy” to put stuff on the card. By the time the servicing of the card becomes difficult, it’s too ate.
Good comments, keep them coming!