Why to NOT use a credit card for emergencies!

Have you ever heard anyone say that my credit card is my emergency fund? I have one just in case of emergencies. What happens if my kid get sicks or my partner loses their job? What if the car breaks down?

These are all excuses. An excuse is the skin of a lie wrapped in a reason. 

I know these statements/questions are excuses because I used to have a credit card and say these exact things. 

Then I was taught that when one of these things happened, it is the exact wrong time to be going into debt and a credit card IS going into debt. It is spending money you do not have with the idea to pay it back within a month. The problem is most people with a credit card do not pay off the balance every single month! Especially when an actual emergency happens. 

I want to let you know the reasons why it is smart to not have a credit card and some ways to get rid of the ones you do have!

Think about who issues these cards, it is the banks. Now think about any city skyline around the world, ask yourself who has the biggest buildings? The banks. Is their furniture nicer than yours? I know it is nicer than mine. This is because they are winning in their business model. 

If you are one of the few people that actually pay their credit card off every month, then I would be mindful of a few things: Keep playing with snakes and eventually you will be bitten. OR The house always wins. 

The next reason to not have a credit card is that you spend more. Studies have shown that people spend more with plastic vs cash. When you spend with cash you feel the purchase. The pain sensors in the brain go off when you hand over a $20 note and only get $5 back. Your brain picks up that you have made a trade. For that same purchase with a debit or credit card the brain does not register the pain/loss. When you pay with plastic you get the item AND the card back, so you have effectively lost nothing. 

I hear a lot of times about credit card points and airline miles. Let me share that when I have talked to, met, and read about millionaires, they never mentioned that they reached a seven-figure net-worth with their credit card points! NOPE. It just does not happen. You must spend $100,000 to get $1,000 cash back on most card rewards. Does that sound wise to you? I hope not! A few things wrong here: you overspent, you bought things you probably did not need and if you had of used cash, you would have been able to get a better deal. 

Using cash helps you negotiate better. You have the power of emotion when you hold cash in your hand and about to make a purchase. Put yourself in the shoes of a business owner. If someone came to you with cash in their hand ready to buy, they asked for a 5%, 10% or even 20% discount. Would you give it to them? Would you counter their offer? Would you tell them no and wait for that certain someone to come by to pay full price with the credit card? I know what I would do. 

Another personal reason I got rid of my credit card over ten years ago was because of identity theft! Yes, my identity was stolen, and my card was used to purchase a year pass train ticket in NYC. I had not yet visited NYC up to that point and yet my credit card statement said otherwise. Luckily, I noticed this purchased and was able to get the money back and a new card. How many people out there do NOT pay attention to the details and just leave the purchases as is? 

In this example, not only did my identity get stolen, I had to spend the time on the phone to Visa and explain this was not made by me. How much time are you wasting? How much emotional energy are you spending reviewing your credit card purchases? If you were anything like I used to be, then you are spending WAY too much. At one point I was checking my credit card statement about 12 times a day!!!! Man, I was in a dark place emotionally when it came to money.

During these early days of having a credit card, I thought I had the perfect excuse of credit card protection especially since I had already experienced identity theft. Well, it is not a credit card that has the protection, it is Visa. A Visa debit card has the exact SAME protection as a Visa credit card. 

At this point I ran out of excuses and finally cancelled my credit card and I never went back! I will never have another credit card the rest of my life. 

Now for those of you with more than one credit card? WTF are you doing? 

If I cannot convince you to get rid of all your credit cards, then get rid of the ones that you do not even use. If you must have a credit card, then I would love to hear your excuse of why in the comments below but also you cannot convince yourself that having more than one is smart!

How to get rid of the ones you have?

If you have credit cards with $0 balance owing, then it is easy. Just call them and say you are wanting to cancel this card as it is no longer needed. They will push back so be ready for this. Be confident and firm with what you are saying. Tell them you are here to build personal wealth and you no longer want to give the company your money in the form of interest. 

If you have a balance and can pay it off, then do so today! Then call and cancel the card.

If you have an outstanding balance, then where is it located in the debt snowball? 

By making the decision of getting rid of credit cards and getting out of debt, your life will start to improve. Not only financially but emotionally. You will no longer need to fret about potential identity theft, you will know that you can afford the things you are buying AND you get to enjoy those purchases even more. 

No buyer’s remorse when you pay cash.