Here are the 3 Alarming Signs That You Don’t Need Credit Cards
The only useful thing about credit cards is that you can use them to pay off other credit cards. In other words, they help perpetuate debt cycles throughout a working lifetime. Unless your debt obligations are minimal, you don’t need credit cards in your life.
Now, if you have a handle on your debt, fine. Apply for as many credit cards that you think you can responsibly handle.
If your debt is handling you, and if you’re responsible for a taking care of a family, then the last thing you need is a credit card. The average American household has over $15,000 in credit card debts.
I speak from experience. I have not used a credit card since 2007 or 2006. At least since before the 2008 global financial crisis.
I don’t miss them.
All I did was use them to obliviously augment and feed my debt like it was an insatiable, 19th century coal-driven locomotive. A personal debt train going to nowhere.
I was using credit cards to pay my rent, groceries, and utility bills. To say that I was financially illiterate at the time would be an obscene understatement.
If you’re in over your heads with credit cards, you’re not alone. And, there may be warning signs that you don’t need credit cards that you maybe be ignoring.
American Credit Card Debt
American collectively owe about $436 billion in revolving credit card debt. Most will pay over $1,140 on the interest fees alone in one year.
At one point in mid-2019, Americans owed over $971 billion in outstanding unpaid balances via revolving credit card debt.
Over 55% of Americans who own credit cards also have unmanageable debt issues.
About 22% of Americans carryover outstanding balances ranging between $100 to $500 monthly.
Unfortunately, as long as a financial problem is temporarily mitigated, people have a tendency to drift along. To go with the flow, until their financial problems become too severe to ignore.
Here are signs that you need to get rid of that credit card.
You’re Barely Making Minimum Payments
The average interest rate is 17.73%. Depending on the credit card you own, it can be much higher.
If you’re only paying the minimum outstanding balance, then you’re committing yourself to paying continuing interest and late fees.
You don’t even need to make new charges to increase your debt load.
Making New Charges While Unable to Pay Minimum Balance
If you can barely make the monthly minimum payment, they why make new charges? When you’re in a debt hole, stop digging.
You Can’t Make Regular Payments
Do you know what happens if you can’t make 4 mortgage payments in a row? Automatic foreclosure, especially if you don’t maintain contact with your lender.
Over 42% of Americans miss at least one credit card payment. About 60% of those people say they miss a payment because they forgot!
If you can’t make your credit card payments, or miss several in a row, what does that say about your ability to manage one?
You Can’t Fill a Debt Hole Until You Acknowledge It Exists
Stop using your credit cards until you pay all outstanding balances in full. It will improve your credit history.
Also, it will improve your chances of getting approved for a mortgage.
That may be easier said than done. However, if you can’t handle your credit card, it will handle you sooner or later.
Read More
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.