Should You Cut Up Your Credit Cards?

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Should You Cut Up Your Credit Cards?

Not everyone should have a credit card, some people really should cut up your credit cards. In fact, for many they are a dangerous thing that allow you to spend way too much, way too easily. If that’s you, you shouldn’t own a credit card, you should cut up your credit cards, NOW! If you are tempted to spend money you don’t have, credit cards are a bad idea. Snip, snip! Similarly, if you have unpaid credit card debt, get rid of that thing as soon as possible. Cut up your credit cards and never have one again. You need to pay off all your debt on these cards as quickly as possible. The banks are killing you on this. Make sacrifices, sell some stuff, refinance the debt into your mortgage or as a one off transfer the debt to a 0% balance transfer card. Just pay it off and kiss goodbye to the plastic.

Some Reasons To Own ans USE Credit Cards

That said, I own rewards credit cards. For me credit cards do a few things that make sense.

  • The bank pays my bills for me and I don’t have to pay it back for up to 55days. I’m happy to earn interest on that while the bank pays it for me.
  • I like earning a few frequent flyer points and turning those rewards into free travel. I have taken lots of free trips with these points. That’s free travel and sounds good to me.
  • Some cards come with free international transaction fees that save when making international purchases or when travelling.
  • You often need a credit or debit card for online purchases. Go debit if credit cards are not for you.
  • You get some purchase insurance or travel insurance thrown in. This is an extra perk, I wouldn’t look for it, but it has come in handy once or twice.
  • I have easy access to most of my transactions to keep an accurate budget.

For these reasons, rewards credit cards make sense for me.

Credit Card Rules

However, I’ve got a few rules that you must keep to make having credit cards worthwhile. If you can’t keep these rules, you shouldn’t have one. You should cut up any credit cards you have that don’t meet these criteria.

  1. You must pay off 100% of the balance every month to not ever incur any interest payments.
  2. Never take a cash advance for the same reason as above.
  3. Never buy anything you wouldn’t have anyway.
  4. Never ever pay an annual fee, unless that fee is waived or there is a cash equivalent given.
  5. Never change your buying habits to earn points or the like, they’re not that valuable.
  6. Never use your card if a surcharge for using it is applied.
  7. If possible earn some points or get some rewards with your card.

Temporary Credit Cards

I would say that sometimes I also get a card temporarily. That is, they might wave their annual fee for the first year or more. You should ask too, by the way. I had one card with one year free annual fee, each year I said I was leaving and I had my annual fee waived for about 5 years running. So ask! You may also get a large miles bonus for signing up that more than outweighs the cost of the card. Unfortunately, the next year the card doesn’t meet the criteria, so it has to go. Now you don’t want to over recycle cards as that impacts your credit history, but I’d usually get 1 a year with a great offer and get rid of it if they won’t extend a no annual fee offer at renewal.

Hopefully that helps you think wisely about credit cards, which cards you should have and why. Or if, perhaps you should cut up your credit cards. Be wise!

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