About a month ago, I cut up my credit card. I stood at my kitchen counter with my glass of red wine, had a moment of silence and then snipped.
My dad had cosigned on this credit card over ten years ago while I was in college so I could build some credit.
And build I did. I built my credit limit from a $2,000 to an over $10,000 limit. And while I had months that were a little tighter than I would have liked (like when I used to spend $100/month on groceries), I always paid the card off. Always.
Then after Bank of America didn’t record my payment and had a 30 minute phone call about it with them a couple months ago, I thought ‘Why am I having to go through these people to spend money I already have?’
So I moved all my automatic billing stuff (internet, Y membership, etc.) to my bank account, canceled my card officially, then cut it up. It was a cool but terrifying feeling.
So if I was building credit and paying things off, why cancel it?
There were a lot of reasons for me to finally do this. Here are a few:
1. You really ‘feel it’ paying cash.
Nothing like taking four twenty dollar bills for $80 worth of groceries to see the value in your purchases. Even though I’m not a big spender normally, looking at my bank account after just one month makes me see I am keeping more of my money now that I feel every purchase I am doing.
2. In terms of combining finances with Derrick, this feels more honest.
Since Derrick and I are engaged and moving in together this month, we are in the process of combining our finances, something I’ve never done with anyone. If the money comes out of our shared account when I buy something, that will make sure I am honest with him and myself… and keep away any unexpected surprises. Because it’s one thing to make yourself rearrange your budget when you decided you had to buy an impulse purchase but it’s another thing to expect someone else to. Even though I’m an honest person and don’t think I’d do this, I am taking away the temptation.
3. Booking a hotel room? Buying airline tickets? A debit card works the same.
For all those people who tell me I will suddenly not be able to buy airline tickets or rent a car, that’s what a debit card is for.
4. I have a line of credit from my bank for emergencies.
I set this up about a year ago. I have $1000 line of credit at something like a 4% interest rate on my personal account at my bank. If I have a small emergency and not enough cash to cover for some reason, that’s available to me. Use a credit card for an emergency at a 25% interest rate? Why would I?
5. If someone really wants to know my credit history, there are plenty of things to look at.
Every landlord I’ve ever had, four years worth of cell phone bills… it’s not like I am unknown in the world in terms of payment history. I don’t need to keep building credit; if someone can’t take my cash, I probably shouldn’t be buying that object anyway.
I’ve told a few friends I’ve done this and the reactions have ranged from ‘Good for you’ to ‘Are you crazy?’. I’m not telling you that you should do this or need to; I’m just saying I’ve done this recently and it seems to be working well for me. If I don’t have the money, I have no business buying something.
Derrick and I are still figuring out how all this will work in our finances but I’m curious: Do you think no credit cards is too extreme a stance? Why or why not?