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What the banking system isn't telling you about credit and credit cards

Have you ever been told that you can't survive without credit? That everyone that is older than 18 years old must have a credit card?

Well, I was taught this same thing until I started learning what the facts were. I will share the top credit card myths that continue to float around like some kind of truth.

  1. Myth: Everyone must have a good credit score.
    Fact: A credit score 100% based on how you borrow money including the amount borrowed, the number of credit applications you're made, and whether you pay on time. 

    A credit score is NOT a wealth score! You can have perfect credit and no money in your bank account. How silly is that? I was actually this person in my early 20's. Once I stopped needing and using the credit score, then that's when I started building wealth. I haven't had a credit score in 10 years and I will never have one for the rest of my life.

  2. Myth: I can't rent an apartment if I don't have credit.
    Fact: You can rent apartments, houses, and rooms. Most apartments will work with you if you don't have a credit score. You may have to provide an extra month's rent or a larger deposit but it's possible.

  3. Myth: I won't be able to qualify for a mortgage if I don't have credit.
    Fact: You can still get a mortgage without a credit history. The process is called manual underwriting. Just like automated underwriting, manual underwriting will want to see a sizable down payment, employment history, and account statements.

    Again, I haven't had a credit score for a long time and I still qualified for a mortgage and you can too.

  4. Myth: You can't rent a car or a hotel room without a credit card
    Fact: You can rent a car and a hotel room with a debit card. I have done this around the world more than once. They tend to take a larger security deposit and you get it back when you return the car or check out of the hotel.

    A debit card does everything a credit card does except spend money you don't have!

    Side note: I have even paid cash for hotel rooms in South East Asia with zero problems.

  5. Myth: Credit cards have better protection than debit cards
    Fact: A Visa or Mastercard debit card has the exact same protection as a Visa or Mastercard credit card! Here is Visa's zero liability policy that protects all Visa cards, credit or debit.

  6. Myth: I have a credit card for an emergency only
    Fact: 70% of Americans with credit card debt admit they can't pay it off this year. Translation: the majority of people use their credit cards for non-emergencies!

    Using a credit card for emergencies is equivalent to taking out a loan. If you did have an emergency such as a visit to the hospital or a job loss, then that is the wrong time to be going into more debt! Credit cards make it all too easy for someone to borrow money. Especially at an average annual interest rate of nearly 20%, according to the Reserve Bank of Australia.

  7. Myth: I get cash back and reward points from my credit card.
    Fact: You spend more with plastic, be it with credit or debit compared to cash. Though, when you compare credit vs debit, the numbers don't lie. The average credit card purchase is $101.72 and the average debit card purchase is $46.50. Both, credit and debit card users average number of purchases per month is 19.

    You aren't getting enough points back to justify your savings by using a debit card. Simply only using your debit card, you save over $50 per purchase. At 19 purchases per month, you are saving over $1,000 PER MONTH by not using a credit card!


The benefits of living without a credit card:

  1. Your identity has a much smaller chance of being stolen
    I've been here in the past when I had a credit card and trust me you don't want to deal with this.
  2. You're no longer tempted to overspend or spend money you don't have
    We saw the numbers above. You spend more with a credit card vs a debit card. That change alone will help you save $10,000 per year.
  3. You actually have money in your bank account
    Your money stays your money and you stop giving it all to the banks.
  4. You become in more control of your finances
    This one I didn't see coming for myself. I thought and felt like I was in control when I had a credit card but when I canceled that crutch, my entire emotional behaviors changed! I became hyper aware of my money in a positive way. I knew where my money was being spent, my bank account was growing faster than ever, and my wealth really took off. 


In summary, you can live without a credit card and I highly recommend it! At the very least, try it for 6-12 months. Pay off all your credit card debt, cancel the cards, and just see what changes over that year. If you absolutely hate it, go out and get another card. I promise there is a bank that will lend you another one when you're ready.

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