I’m just sick of credit cards. Simple as that. No, I’m not carrying balances or paying finance charges (I haven’t for years). I don’t like tracking my spending and balances with credit cards, I don’t feel very “rewarded,” and I often feel I spend more (see my “cash over credit” post). Maybe that’s all crazy or lazy or untrue, but it doesn’t feel right, so I’m just going to quit. Here’s why I’m making the switch.
My Capital One “No Hassle Rewards” card gives me a free $150 flight if I earn 15,000 miles. But to get to 15,000 miles, I need to spend $12,000. That takes me a year or more (thankfully) to earn a meager 1.25% cash back. Once I earn that many points, I can get the free flight, but only up to $150. If the flight costs more than that, which most flights do, I can’t use my miles.
What about cashing in points for gift cards or other rewards? If I want a $25 Home Depot gift card from the rewards store for 5,000 miles instead, and I’ll have earned myself a 0.625% return. Worthless.
Don’t get me started on how long it takes me to cash out $50 in rewards from Discover via 1% cash back. Sigh.
I’ve also opened new credit cards accounts for “travel hacking” purposes. Sure, I earned 100,000 British Airways points after spending $2,500 within the 3 month time limit, but now I just accumulate points at a much lower level. But here’s a scary thought: the more I spent on my card, the more sense of accomplishment and satisfaction I felt as I neared my reward. It doesn’t make much sense to me to spend money to make money like this. I haven’t redeemed any miles yet, so I haven’t gotten any enjoyment from my rewards yet, either.
When it comes to credit card rewards, I think Baker’s credit card rewards post says it best:
“Don’t try to beat someone at their own game. It’s not impossible to beat people who’ve spent their whole lives studying a specific game, but it’s rare to have consistent long-term success.”
These credit card companies are HUGELY profitable for a long time, and they wouldn’t be that way if many customers weren’t paying billions in interest, fees, and other charges.
Security is No Matter
Debit cards aren’t any less secure than a credit cards. According to Dave Ramsey:
“If you hold a debit card from a well-known name like Visa or MasterCard, it will have the same policy about unauthorized charges that credit cards have.”
This means there’s no security advantage to credit cards (as long as you don’t use your pin to complete the transaction). I’ve had 3 or 4 cases of fraud with my credit cards, but haven’t had any problems with debit. Until I do, I feel plenty safe.
I Like Using Cash – Even While Traveling
Personally, I don’t think skipping credit cards will make travel much more difficult. I tend to choose cash over credit when I’m abroad, and you won’t have a choice in a lot of places anyway. USAA charges a 1% fee on foreign withdrawals, which is hardly worth thinking about. Besides, many credit cards charge foreign transaction fees, such as my Chase card that cost 3% to use.
Using cash hits my pain points. I feel more emotional when I pull cash out of my wallet, and I notice when I’m going to the ATM more and more often. I find spending cash frustrating and stressful, which is a good thing because I end up spending less.
I Want To Concentrate On My “Savings to Quit” Goal
Right now, I use multiple credit cards because I have recurring payments, like Netflix, on auto-pay. During the month, I usually run a balance on multiple cards, making it frustrating to keep track of balances on the cards and figuring out how much I’ll have to transfer from my checking account to pay those balances.
Instead, I’m going back to basics so I can concentrate on my $10k savings goal and not managing credit cards. I’m simply going to have my one USAA account and one USAA debit card, and I’m really excited for how much easier this is going to be. I’m sticking with USAA for now, even though they just canceled their debit rewards program. I’ve been pondering a switch to PerkStreet after meeting some people from there at the Financial Bloggers Conference, so I’ll keep you posted if I do make the switch.
How long will this last? I’m not sure yet. It’s indefinite for now. I’ll still carry a credit card for emergencies, but I won’t be pulling it out for regular purchases.
I know there are a lot of “fixes” that could work my issues with credit, but I’m just not interested in trying to fix this right now. I could sign up for Mint again, use just one card, or try other remedies, but I really just want to go without for awhile.
Side note: I’m thinking about making this a regular series of things that I can “quit” that are standing in the way of my goals until I leave my job. It sounds like a fun little side-series, so stay tuned for the next installment.
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photo by: Gedankenspiele