3 Myths About Owning a Credit Card

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If you spread a myth long enough, then people start to believe it as a truth. That’s something we fight against every day.

For decades, people have believed life is best-lived through debt, whether it’s car loans, student loans or credit cards. But that’s simply not true.

You don’t need a car payment and a credit card to make it in this world. You can, and should, live without debt.

So what are some of the myths about credit cards?

1. Credit cards teach you how to be responsible with money.

To learn how to be responsible with money, you need money, not a card that says I “promise to pay you back sometime in the near future.” How does that teach you how to be responsible with your income?

2. Credit cards are good for emergencies.

No! An emergency fund is good for emergencies. An emergency fund is simply a savings account that you have set aside to cover all of life’s unexpected expenses, like a broken HVAC, a flat tire, or a trip to the ER. Start with $1,000, and once you are out of debt bump up your fund to three to six months of expenses.

3. Credit cards are great because of points programs that include airline miles and cash back.

One study found that when you use plastic instead of cash, you spend 12-18% more. Whatever minor perks you gain by using that credit card is easily wiped away by the extra amount you spend. When McDonalds started taking cards, the average sale went from $4.75 to $7.00! When you use cash, you “feel it.”

Bottom line: There are a lot of myths floating out there about credit cards, so don’t buy into everything you hear.

Make a plan for your money and use cash so you aren’t stuck pulling out plastic every time you want to buy a burger or go on a date. Use common sense and don’t spend money you don’t have!

money | @rachelcruze