We no longer have credit cards. In order for me to retire, we needed to be able to survive on a very limited income. So one of the things that we needed to do is pay off all of our credit card balances.
We refinanced our home for a lower interest rate and took out extra cash to pay off our credit cards. We have been able to see the advantages and problems to having credit cards. I thought I would share some of them that we have run across.
Advantages of Having Credit Cards
- 1. Buying items online
- 2. Car Rental Agencies require a credit card
- 3. They are convent and easy to use
- 4. Great for emergencies-washing machine breaks, etc.
- 5. Can pay the bill all at once, make the minimum payment or pay extra
- 6. Your credit card accounts are in good standing it increases your credit rating
Problems of Having Credit Cards
- 1. Buying items when not needed
- 2. High interest rates
- 3. High balances can have an impact on large purchases such as a car or house
- 4. Never Paid Off
- 5. If your income changes due to retirement, job loss or for any reason it will become hard to make the monthly payments
- 6. Not living within your financial means causing money flow issues
- 7. Credit Card companies keep increasing the available credit of the card
Although credit cards can be great to have on hand for emergencies or occasional purchases, we have found that it was too easy to use them and lose control. This is what happened to us and the balances on our cards became so large that we could not make the monthly minimum payments.
We have found that we can use our bank debit card in the place of a credit card for most items and we live within our financial means. We now have that extra money to save for vacations or other things. It is such a wonderful feeling not to have to worry about our credit card balances and the payments now.
I think that having a credit card with the available balance of around $500-$1,000.00 for emergencies is ok, but only if the payments would fit into your monthly income. Just be aware that even though credit cards are a convenience for you it is a money making market for the credit card companies. If you get out of control, they are not always willing to help with lower payments or interest rates. Also, be aware that if you have large balances the credit card companies can double your monthly payments to get the balances down. One month your payment is $200.00 the next it is $500.00 and you are scrambling to get the money to make the payment.
I have seen so many people get into trouble with credit cards and not be able to pay them I now would think twice about ever having another one again! Please be careful!