I am going to put it out there and say credit cards are NOT evil! That is right, I don’t see why there are so many people that think these little plastic cards are so bad. There was a great article yesterday asking if credit cards are evil and I still say no! Before you start shouting at your computer screen, hear me out. If you don’t know me, then here is some background on how experience with credit cards. I used to be in over $50,000 worth of credit card debt. With that amount of debt, I have a little knowledge on how they work. This credit card debt also gives me a little credibility when I talk about cards not being evil. I have been there and done that. I paid off my credit card debt through hard work and determination. Mix in a lot of side hustling and you got a man who has been credit card debt free for almost two years. During the four years it took to pay off my cards, I gained a little insight into the world of credit and what I was doing wrong. It was quite eye opening.
Credit Cards Get All the Blame
Running a personal finance blog, you tend to hear a lot of personal stories. That is really one of the awesome benefits of being a blog owner. I love hearing about people’s stories. Some are good and others are bad. The one thing that I hear time and time again is how credit cards allowed people to get into debt. Those little plastic cards allowed people to spend beyond their means. While on the outside, that is completely true. Credit cards do allow you to spend more than what you have in your bank account. Since credit cards are not tied to your bank balance, you can just keep spending and spending until you reach your limit.
Along with this theme, I have realized that people are just really placing the blame onto the card and the card issuer. They are made at the credit card company when they owe them so much money. They cut up their cards and curse off credit for good. I don’t have any problem with people not using credit. There is absolutely nothing wrong with that. Credit should only be used by those that understand how to use it wisely. The issue is this is not really how it is. There are so many with credit card debt, amounts into the billions racked up on their cards. It is a national problem at this point, along the same lines as student loans.
The Blame Lies with You
I hate to be blunt, but this has to be said. If you have credit card debt, then you can’t blame anyone or anything else, but yourself. Credit card debt doesn’t just happen. It is typically accrued over time. I never once blamed my credit card for allowing me to incur so much debt. Main reason is such actions are unproductive. Blaming a credit card for your spending problem is going to get you nowhere. Let me give you a quick example.
Blaming a credit card for your credit card debt is like blaming a screwdriver when you injure yourself trying to break up ice. A screwdriver is just a tool that you use. It has a single purpose dedicated to screws. There are different types of screwdrivers depending on the need. If you take a screw driver and decide to use it as an ice pick, then you are responsible for anything that happens. The screwdriver is not designed to break up ice. If you then blame the screwdriver for something happening, then you are just deflecting blame. This is the same thing with a credit card and so many people do it.
Another personal finance issue similar to the misuse of credit cards is how consumers misunderstand the purpose of life insurance. Many insurance experts recommend separating your life insurance and investment needs, meaning never using your life insurance policy as an investment vehicle. Unfortunately, some U.S. consumers still fall prey to agents and brokers touting whole life insurance is a good investment when simple research will explain why whole life insurance is a bad investment for more than 95% of the population. Years later, most whole life insurance policies are cancelled because again, life insurance is a great estate planning tool, but if used inappropriately, can yield bad financial results.
Credit Cards are Not Evil
Yes, a credit card can be used for different things, but they have rules. You don’t follow those rules, then you face the consequences. When I hear about people calling credit cards and the companies evil, I just think of this screwdriver analogy. A credit card is just a tool, just like other financial solutions to our disposal. When you use it correctly, then there should be no issue. When you don’t use it the right way, then that is when things go wrong. You can’t blame a tool when you don’t know how to use it properly.
Ever since I paid off my last credit card, I actually started using them for every purchase. I have two go-to credit cards, which are both rewards cards. I now earn great travel rewards or cash back with ever purchase, but I don’t pay a dime in interest. I follow the rules and understand that if something happens, then I am to blame. If I carry a balance, then I spent more than I should have. If I miss a payment, then I didn’t keep up with the bill. These are both issues that are on my shoulders.
You can argue with the record profits that credit card issuers are getting, but that can all go back to this argument. They wouldn’t be making billions of dollars if people were not using them incorrectly. If you use the tool correctly, things tend to go OK. Of course, credit card companies don’t mind when you don’t pay your bill on time or let balances float, but you are only hurting yourself. All I ask is that people stop calling credit cards evil. I have found a great use for them and realize that blame was only with me.