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Credit Cards Aren't Evil

This is a common phrase I hear. People either feel guilty they haven't cut up their cards or they wish they didn't have so many. Repeat after me: credit cards are a TOOL. Other tools include loans, debt consolidation, bankruptcy, budget, financial coaches, financial advisors, etc. Needing to use one of these tools does not mean you are weak or careless. It's simply a vehicle to get back on track. Will they come with different price tags and consequences? Of course. We just don't need to add any more shame to the process. You may have learned this concept from a young age, but it's time to think differently.

I've had countless clients tell me "I know I need to close this credit card, I promise I will." I love their faces when I say "Why?" Sometimes they truly need to, as they can't regulate their spending yet. We analyze that with their overall credit picture so they don't lose score points by closing an old account.

You know all of those awesome perks you get from using a credit card? Those are paid for by those who don't pay their statement off in full each month. Each time you accrue credit card interest, you're paying for someone else's airlines miles. It's not a straight comparison, but you get the idea. Credit card companies aren't forking over their own money to pay out rewards. That concept is infuriating for those who are stuck with debt.

The first step to use credit cards is, you guessed it, pay off the debt. There are many ways to do this factoring in your unique financial picture (book a consultation with me to learn more). The next step? Only spend money you have in your checking account on the credit cards. That can get out of hand quickly, which is why I love YNAB for credit cards. The program is built so that you are forced to assign money to pay off your credit card in full. You can choose not to, but it's an active choice. Money effortlessly moves from funded categories to your credit card category.

If you don't have credit card debt, congratulations! You get to use all of those awesome perks. You can earn extra money by opening new accounts and strategically spend based on reward offerings. For example, I put big purchases on my Southwest card to get flights. Gas and Costco purchases go on my Costco card. Restaurants go on another card with higher rewards for that category. Do you see what I'm getting at? The best part: each card is paid in full each month with money I've intentionally set aside. When my clients get to this point, the world truly opens up for them. I challenge you to reframe your perspective on credit cards and see how you can make the system work for you.

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