Stop Playing the Credit Card Games

We all remember our college days... Willing to do just about anything to get a free t-shirt. Which means credit cards filling our mailbox, with limits that we could not possibly pay if we actually used it all. Thus the games begin and continue...

Confession time… I cut up all my credit cards about 2 years ago. Yes, I fully followed Dave Ramsey’s advice all in and did away with the points, the miles, you name it, and moved on to find satisfaction knowing that each month I had no bills to pay. Then earlier this year I got suckered into a Citi card and signed up for an American Airlines card that gave me 95,000 bonus miles that I thought would be great to help pay for the flights for my son coming back and forth from college.

My thoughts, I’ll take the points, get about 10 flights, and then dump the card. So, I believe it was March when I received the card and decided I was going to link it to my Emergency Fund. Anything that was over and beyond what I had planned for was going to just come out of that account and meanwhile, I was going to get all these airline miles.

Then comes flight booking time and boom I realize there is no way I’m going to get 10 flights out of all these miles, maybe 4-5 if I manage it closely. So the first flight I booked came straight out of my own pocket because I did not plan far enough in advance and I had no flexibility on the date of travel, so I paid the money to get the flight I wanted. Using the miles would have cost me about a quarter of what I just got for free, so let me wait. Then I look for Thanksgiving…um no, I’ll pay out of pocket for that one too as the cost of those flights would have been more than the miles I had. So 95K in miles, I’ve paid for 2 flights and got 2 for the miles.

Why is this so bad? Well, the flights I got with the miles are just over $100 a flight if I just book them on my own. Your thoughts, so you saved $200 by having these miles. The answer is correct, but the hassle of searching, going back and forth, and moving dates, is not worth $200 to me. Not to mention for me to rack up these miles without the added bonus would take a good bit of time. Come the end of the year, the card gets cut up and I'll manage my expenses like I always do.

Now, do credit cards work for SOME people? Yes, some people are diligent, manage a budget, and keep on task with paying these off monthly. What do they get in return? Free flights, maybe some cash back, points towards other things. Sure they do, but the question is are you that person who is doing all that. Truth be told, almost 50% of Americans do NOT pay off their credit cards each month*. Some studies show that Credit card usage leads to overspending. WHY? Simply you are buying without looking at a true budget, resulting in overspending and rising debt.

I’m not fully against credit cards, but truth be told more than 50% of Americans cannot handle them. If you are not managing a budget then you should not be using a credit card, it is that simple. You want to stop overspending and get on track with your money, then cut them up. Their purpose is to charge you 20%+ interest and make money off of you. Why? So you can have the coolest gear or the most up-to-date fashion?

But wait, you get cash back…ok, I’ll give you 1% of your cash back while charging you 10 times that over the year in interest.

It is a game, and until you face the facts you will continue to struggle. Those minimum payments will keep you bound to the credit card for life.

Wait, I almost forgot, you need it to establish your credit score…Ok, if you want to make that argument, go ahead and get one. But first, get yourself on a budget and limit those expenses to key specific items. Can you get an apartment or mortgage or anything without a credit score? Simple answer, yes you can. Is it going to be as easy as having a credit score? No, it is not, but it is possible. But it starts with making the right decisions now. You cannot live on a credit card and pay it off monthly if you are not living on a budget and managing your expenses.

Credit cards are in it to make money, plain and simple. Even if you use a debit card, you are supporting Visa and Mastercard, so don’t be fooled. You can do better, but you have to say no to buying things on credit and you have to say yes to getting on a budget.

*https://www.forbes.com/advisor/credit-cards/credit-card-statistics/