Credit Cards Are Not the Enemy, You Are

Rachel Yerks

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Disclaimer(s): 1. This article is meant for people with credit card charges related to unnecessary spending. Not food, shelter, and other necessary expenses. 2. There are no referral links mentioned.

I remember getting my first credit card during my sophomore year of college. I had been an authorized user on one of my parents’ cards for a couple of years, but this was my first. Granted I was only eligible for this card because of their income, but it was connected to my bank account nonetheless.

As a finance nerd even back then, I read about how to increase your credit score through on-time payments and I never carried a balance for fear of interest. Until I did.

I got too comfortable using my credit card

My card was connected to my bank account, and I knew how much was in there — $500. Charging takeout with friends, shopping online, and buying Christmas presents didn’t seem like it would add up to $500. Oh, but it did.

I remember the bill coming due and I didn’t have enough to pay it off. I paid the minimum and then realized the damage. At the time, I had another bank account in another state, but I didn’t have an online option to access the money. Luckily for me, I could take a four-hour train ride home for the weekend and grab money from that account to fill my account near my college.

I paid it off quickly, and because I was in my introductory offer period, paid no interest. I did not know I was spared of the interest at the time. In fact, I expected my payment history to go down the drain, but I didn’t tell anyone for fear of being shamed.

Luckily for me, it was a (somewhat) cheap way to make a necessary mistake that I haven’t made since.

I also closed the bank account I didn’t have convenient access to so that my money was always within my grasp should I need it, which is very important for safety reasons. I highly recommend having access to your money, except in the case of retirement savings or if you have trouble managing your finances. You know what your limits are.

We all learned the lesson, but only some of us listened

We all have that friend who charges crazy amounts to their credit card, without worry. Sometimes they can afford to do it, and sometimes they can’t.

“Oh, I can pay the minimum”, he told me. Next month he couldn’t, and I lent him a few hundred dollars. [He did pay me back, with interest.]

My friend used to be one of those people who spent his money on fun events and takeout, knowing he could wipe out the costs with an upcoming paycheck. The only problem with that method is if the next paycheck doesn’t come or if your car breaks down, or another unexpected, important expense hits, you’re stuck.

The friend has a very healthy bank account now and no credit card problems, regaining 200+ points. It took a few times, but he learned the takeout and shopping lesson as well.

Credit cards are useful tools

Barring actual addiction, a lot of us fall into that lul of fake security offered by our paychecks, and more dangerously, our credit card balances. That said, as long as you do not have a past history of abusing credit cards, they can be beneficial.

Many cards offer cash back, which means for different types of purchases, you’ll receive some of the cost back into your account. Typical cash back categories are groceries, travel, and gas, but many cards have more.

If you are going to be spending money anyway, whether it’s on a new piece of furniture, Christmas presents, you name it, you should be getting some of that cash … back. See what I did there? Okay.

The only problem is when you spend money on things you don’t need and think it’s okay because of the cash back. It’s not. 3% of $100 is $3. That $3 isn’t worth the $97 purse you grow tired of next month. The cash back feature should be thought of as a bonus present for yourself, on top of the purchase.

If you’re someone who regularly shops online every week to the detriment of your wallet, take a peek at this News Break article. It may very well change your habits — and the way you think. Minimalism is not only for the broke.

Credit cards I recommend — no referral links (I promise!)

I have the Chase Freedom Unlimited card and love it. It offers 5% back on travel and 3% at restaurants, amongst other things. I’m also looking into getting the Discover It Cash Back card, which offers 5% back on Amazon around Christmas, amongst other things. Both are excellent options if you’re eligible.

I haven’t put any referral links in this article, by the way. They’re good cards — regardless of if I’m paid to tell you or not. Full transparency: I got declined for the Discover It Cash Back card, but I’m going to try again in a few months. It’s such a good card.

When you are looking for cards, pick ones without annual fees. You shouldn’t have to pay to spend your own money, right? Look for cards with low APR if you are unable to always pay off your balances. Finally, look for cards with a high baseline of cash back on everyday purchases, or look for cards that have a lot of cash back for one specific thing, like restaurants or travel. Use each card in the best situation possible.

Remember, if you cannot use credit cards responsibly for any reason — it’s not worth getting any. But if you can, you should. Credit cards are valuable tools both for cash back and your creditworthiness which you’ll need at some point to purchase a house, most likely.

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