Tuesday, July 9, 2013

The Great Credit Card Debate

Actually it wasn't that great and the only debate going on was inside my head, but over the past few weeks I have been wanting to apply for a credit card.  I think it was because every day that I was working, I was seeing people with massive amounts of cash buying in for poker games and all of them seemed to have a wallet full of credit cards (of course, some of that cash could have came from their credit cards but I digress...).  It seemed like the "cool" thing to do--the adult thing to do--to have a few credit cards in my wallet.
I haven't had any credit cards for a few years.  At that time I was in debt, I found Dave Ramsey, and I promptly cut up my credit cards, paid them off, then cancelled the accounts.  Back then I felt all cool and impressive and grown up when I flashed my collection of credit cards (I had nearly 20 cards by the time I was 19 years old...I was also deeply in debt for YEARS).
So one side of the debate, the reasons FOR applying for some credit cards, were:

  • I could use them in the event of an emergency
  • I could carry some "status" cards like American Express that would show how "cool and impressive" I am
  • I could earn air miles, cash back, and other perks when I use them
  • I could build up my credit score

Basically those were all of the reasons I could think of to have credit cards.
But on the other hand, some of the reasons AGAINST getting credit cards that I could think of (to myself, in my head...really my head is a busy place!):

  • If I have an emergency, getting into credit card debt would only create more problems (although the use of the card would temporarily give me some money, I would then be in DEBT and could end up struggling to pay back the debt)
  • If I have a real emergency where I needed cash I can take cash from my savings/emergency fund.  For a bigger emergency, I could easily borrow a large amount of money from a few friends and relatives (I know mixing money and relationships is a really BAD idea but there are a few people who would loan me money if needed)
  • If my self esteem depends on what others think of me because of the things I wear or the credit cards I carry or the car I drive or other material things, I am not as evolved as I should be/want to be
  • My credit score was high enough to buy a house so it should be just fine without amassing credit card debt
  • I might be more likely to buy things I don't need on credit because I am tempted to rack up air miles or cash back, etc.  That would be a bad thing.
  • I don't have a job as of now which means I don't have a steady income.  Using a credit card would mean I am pledging future income to pay my debt and I #1 don't have a set future income, and #2 don't want to be forced to get a job to pay for debts I rack up (this is the biggest reason I live frugally and don't get myself into debt...I don't want to be forced to work a 9 yo 5 job!) 

So after much deliberation I decided against applying for any credit cards during these past few weeks when I would technically have the main qualification to get one, namely a job and an income.  It really does make more sense, to me at least, to follow what Dave Ramsey says and carry debit cards with the Visa/Mastercard logo on it them which are backed by actual cash that I have in the bank but can be used just like a credit card.  End of debate.

4 comments:

  1. Yay, I'm glad you decided not to do it. We have 3 that we want to get rid of when we do some refinancing and after that we will follow your example. CASH only!!
    Love reading your blog from Australia.

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    1. Thanks for the support! I dont feel so bad about not getting a card now :)

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  2. I have one card I use and another thats in the safe deposit box for emergency(the wifey keeps the other in her purse) But for the most part I live without the credit cards. While they are ok to have they can set you back if you don't use them wisely. I think you have the cons out weighing the pros so stick with what works for you. Thanks all that matters in the end.

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    1. Exactly. The comments I made work for me while for other people, they may not be tempted to spend with a card or they may have a steady income, etc. I guess each person needs to decide on financial issues based on their own particular circumstances.

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