Last fall I paid my last monthly credit card statement and then closed the account. I had had the card for three years and used it to pay for a trip to England and Ireland, to fill my gas tank and to finance many a bar tab. But all that is behind me! I cut the cord and I haven’t looked back since.
Why don’t I have a credit card? For the very simple reason that I don’t need it. For me, a credit card is a very slippery slope into mindless spending. It’s easy for me to pull out my credit car at a bar and rack up at $35 tab. (That’s a lot for Austin!) It’s easy to pull it out at Target and go over my carefully planned budget. The money is just there! They’ll give me whatever I want! Like, right now!
While I consider myself very financially responsible, it is only because I have made decisions like this over the past year and a half. I know myself well enough to know that with a credit card I easily spend around $600 more a year on needless things. As I focus on paying off my student loan debt, that extra $600 is too precious to me to see it squandered on drinks or $8 Target tops.
I also don’t need the line of credit for my credit score. I have my loans to continue to establish credit history and I currently have a great credit score. I had one credit card for three years and a different one for two years. I have been paying my loans for three years already and have at least one more to go. Credit score companies have a lot of information about my ability to make payments on a variety of accounts and balances. Having a credit card right now won’t really help anything.
So, I don’t need a credit card and thus I don’t have one! I will again soon though. I plan on opening one about halfway through 2015. I’d like to have one that has excellent travel rewards. My clever little plan is to use it to make loan payments (knowing that I have the cash to pay it off each month, of course!) so I can quickly hit large spending amounts. Many of the best rewards cards require you to spend somewhere between $3000-$5000 in the first three months of having the card in order to get the bonuses they offer. I don’t spend that kind of cash on anything but my loans! So why not make them work for me for a change? I mean, how else am I going to get to #Italy2016?
Photo Credit: PT Money.
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.