Just Pay It Off Each Month, They Say
Credit cards are our best friends... until they become our worst enemies. Unfortunately, we never know when that tipping point will come. One minute we're fine, and next our financial life is ruined. I've been on a crusade against credit cards for nearly 15 years, and there's no better topic to stir up the hate train than to discuss my disdain for them.
First, no, I don't use a credit card. I used one from age 18 to 30. Then, after much research about the cold, hard data, the predatory nature of the product, and the behavioral science implications, I drew a line in the sand and decided to permanently ban them from my life.
A quick FAQ:
What do you use if you don't have a credit card? We use debit cards.
What about the risk of your card getting stolen? Our cards have been stolen multiple times. It's annoying, but you aren't liable for loss.
What about travel? You NEED a credit card for travel. I've traveled to more than 30 countries with only a debit card. It works great.
Don't you need a credit card to book a hotel room? No.
Don't you need a credit card to rent a car? Some companies, yes; other companies, no.
You use your debit card for online shopping?!?! Haha, yes. Every single day of my life.
Don't you want to build credit? No. I haven't had a credit score since 2015.
Here's one of the primary arguments FOR using a credit card (primarily to collect those sweet, sweet points): "Just put everything on a credit card and pay it off every month. Just be responsible!"
The truth is, that's not what people do. In theory, yes, that's a great idea. However, in practice, the data shows something much different. My coaching experience already tells me this is true, but data recently released by the Federal Reserve paints a clearer picture.
There are currently an estimated 268 million adults living in the United States.
81% of those adults, or 217 million people, own a credit card.
Of the people who own a credit card, 46% (100 million people) carry a balance each month.
"Just put everything on a credit card and pay it off every month. Just be responsible!"
This principle works really, really well......until it doesn't. And today, unfortunately, 100 million adults in the U.S. are (secretly) living in the "until it doesn't" reality. This is ripping families and lives apart!
"Well, it must be the young, irresponsible people who are being stupid with their credit cards."
The demographic most affected by carrying credit card balances is 45-59-year-olds, with 54% of cardholders carrying a balance from month to month. "Only" 44% of 18-29-year-olds carry a balance.
"Well, if people made more money, they would pay off their credit cards instead of carrying a balance."
Even in households earning $100,000 or more per year, 38% of cardholders carry a balance from month to month.
Credit cards aren't a math problem; they are a human problem. Credit cards aren't a responsibility problem; they are a psychological problem.
Something to think about today.
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