You probably shook your head in disagreement when you read the title “why credit cards are dumb”. The truth is we’ve been targeted by the culture with the belief that credit cards are a good thing. But let me challenge you and tell you why they are not. The bible is very clear about debt. It says that the borrower is slave to the lender. Translation: if you are in debt you are a slave. Now, we don’t like to hear something like that. We’re in control of our own life. What does God know anyway. I don’t feel like a slave because I’m in debt. That part of the bible must be wrong.
There are a lot of opinions out there about debt. Especially credit cards. There are several myths about how you need a credit card to live now-a-days and how much smarter and better off you’ll be by using credit cards. Here are some of those myths:
– They are safer to use than carrying cash or using a debt card
– I get points, rewards, cash back, airline mileage, or a pizza and a free hat
– I pay my balance off every month
– I spend the same amount on my credit card as if I would by paying with debit or cash
– You need to build up your FICO score
– You need to build your FICO score to buy a house
– You need a credit card to rent a car, buy something online, get a hotel, or to travel
– Credit Cards are a tool
Now, I’m not going to go into each of these myths in this post. Here are some good articles to read on that: Here – Here – Here – Here. What I will say is, even if all those things were true and they all applied to each person who uses credit cards and no one ever got into trouble by using them, even if all that was correct (basically a perfect scenario), there are at least 2 issues that I see…
#1- If you don’t spend more than you normally would and you paid off your balance every month before the interest kicked in AND you got some perks for using your credit cards… then the credit card companies would go out of business. They like making money not losing it. They have done a lot of research and continue to spend millions and millions of dollars on marketing, case studies, and studying the behaviors of how we shop. Do you really think you’re winning at THEIR game?
#2- This one, in my opinion, is the most important reason. BECAUSE OF WHAT THE BIBLE SAYS ABOUT IT. Nowhere in the bible does it have anything positive to say about debt. All the stories and warnings are of bad things. Do you want to be a slave? Of course not.
So ask yourself if you have benefited from credit cards. I would venture to say no. Read a previous post I wrote called “My Financial Lesson“. It talks about how much debt we had and what we did about it. Being debt free is an amazing place to be. And not having any credit cards is even better. It’s been 3 years since we last had a credit card and we are doing just fine. We are still able to live in this world without them. And the best part is we are NEVER going to have a credit card again, period. Give it a try. I promise that in the long run it will bring you more happiness than sorrow by not having them.
When you have debt and use credit cards you are settling instead of trusting and having faith in what the bible says about it. There is no (good) reason to have consumer debt. If you plan for something and save for it, you can have it. But most of us don’t like to wait. We are impatient and want what we want now. We live in an instant gratification culture. The whole culture has A.D.D. If you’re in debt and have to rely on your credit cards to survive, you have a serious problem and it’s not going to get any better if you don’t change something NOW! Read a past post about the importance of doing a budget and how you can get control of your money.
Just a quick example of a cash back system: you get 2% cash back on any purchase you make. So, if you spent $1,000 you would get a $20 kick back. Depending on what you bought, don’t you think you could have gotten a discount of at least $20 by negotiating and offering cash? Um, yes. My wife does it all the time. Dave Ramsey says if you play with snakes, you’re going to get bit. That’s what credit cards are; Snakes. Be careful. Don’t risk double-digit interest rates, extra fees, and collectors just to get back 2%. Taking all those chances for a return that won’t even pay for a Saturday night dinner is stupid.
Debt is a way of life now. Today, debt is the most aggressively marketed product in the history of the world. Debt is normal. But normal is broke. Normal is most Americans living paycheck-to-paycheck and foreclosures and bankruptcies are at an all-time high. These are all too common.
There is study after study that will argue both sides of this coin. All I’m saying is if you believe in the bible, then take that advice. If you don’t believe the bible, then just take a look at your life and situation and ask yourself, honestly, if you are better off with having credit cards and/or credit card debt. If you’re not, then make a change today.
The rich rule over the poor, and the borrower is slave to the lender. (Proverbs 22:7 NIV)