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3 Reasons Credit Cards Didn’t Work For Me

Credit Card TrapTo use credit cards or not? That is the question.

Like most of you, I have placed a good many credit cards in my wallet through the years. I believed what every American hears – that using credit is convenient, it’s safer than carrying cash or debit cards, and there is protection on large purchases. I also figured I needed one for emergencies, and of course to improve my credit score for those all-important car and home loans.

Good people come down on both sides of this question and the purpose of this writing is not to discuss the pros and cons of each position. Rather, I would like to share with you why, after years of using credit cards for EVERY purchase, I just finally decided it wasn’t for me. I just couldn’t get past these three issues in my life.

I’m a Natural Spender.

I love to budget, save and grow my net worth, but I LOVE to spend. Spending makes me feel good. So watch out if I’m a little discouraged about something in my life. A trip to Home Depot, Dick’s Sporting Goods or Starbucks is right around the corner.

I consistently spent too much each month. My wife and I had a monthly budget to follow, but I considered the numbers more fluid than fixed. So, it happened each month there were one or two additional purchases that were outside the normal bounds of the budget. In order to cover those expenses when the credit card bill came, we had to draw from our savings or investments. Not a good scenario.

Speaking of Budgets…

Our family budget was a nightmare. The major frustration came because I was forcing myself into focusing on three months of budgets at a time.

I needed a line item in the current monthly budget for all the credit card expenses I charged the month before. I’ve already admitted to blindly overspending, so when monthly budget planning time came, I really didn’t know how much to allocate for paying off the prior month’s credit card bill. When I got the bill each month, it was always a surprise. “I spent how much!?”

I also had to plan ahead for the next month’s budget, but I couldn’t accurately predict how much to allot for the credit card bill payment line because the current month was not yet over and I would surely spend more before it was done.

It was just too complex to focus on last month, this month, and the next month all at the same time.

What Rewards?

I tried credit cards with all kinds of rewards from airline miles to merchandise purchase plans to cash back. In the end, I never really was able to capitalize on any of them. I hated keeping track of all the accounts where I was accumulating rewards. It also felt like I had to spend too much to get so little in return. I remember getting that check in the mail from one of our cash back plans and thinking, “That’s it? After I spent all that?”

I heard someone say once that no one ever became a millionaire based on a credit card reward system. That statement really opened my eyes.

So What Have I Found?

In the two years my wife and I have been on our cash or debit card only plan I have seen an incredible change:

  1. Our (my) spending has dramatically been reduced. Cash and checking accounts are finite. They create spending limits you can’t really cross without immediate consequences.
  2. Our savings rate has skyrocketed. In about 18 months, we had a fully funded emergency fund.
  3. After some initial challenges, it now takes considerably less time and effort to prepare our monthly budget.
  4. If I want a reward, I save and then get it. It’s much more satisfying this way.

I won’t be going back to credit cards. The quality of my life has improved too much since the day we made the switch.

Do you face any challenges with credit cards? If you have abandoned the use of credit cards, how has your life changed?

Next Post: What My First 50 Blog Posts Taught Me About Myself

Prior Post: A Secret to Success (For Men Only)

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  1. We used credit cards as an emergency fund. They’re terrible for that purpose. However, I still think that for some people using them for rewards can work to their advantage.

    • I’ve heard of some people doing better with the rewards programs. I just realized in my situation it was one more thing that wasn’t helping me accomplish any of my financial goals. The rewards were not worth keeping the cards. Thanks for the comment.

  2. John S @ Frugal Rules says

    I used to use credit cards like crazy, that’s how I got into so much debt. Thankfully I learned my lesson and have been on the straight and narrow for about 15 years. My wife and I use a cash budget because it helps us stick to our goals and we do spend less as it just hurts to part with cash. We do use credit cards as well, simply only spending what we have budgeted for and to stretch our budget a bit more.

    • Awesome that you were able to develop the discipline to not let the credit cards control you anymore. I have simply been amazed at how much less I spend each month only using cash and debit cards. Wish I would have figured this out sooner.

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