We’ve all heard the idea that credit cards are evil and that you shouldn’t have one. We also know about the obvious negatives of getting a credit card too early in life. I’m sure we’ve had someone suggest to us before that we should cut up our credit cards. I personally think that it’s irresponsible advice to blame credit card companies for your financial situation.
I remember addressing a reader question about canceling a credit card. Today I wanted to talk about the idea of actually cutting up your credit card when you get fed up with it.
Why is it a dumb idea to cut up your credit cards?
It doesn’t address the problem.
What do you accomplish by cutting up a credit card? You haven’t done anything about your lack of control and inability to delay gratification. I don’t want to come off like a jerk, but the reality is that cutting up your credit card won’t solve the real problem here. I would compare this to when someone throws away cigarettes in hopes that a friend will quit smoking. The problem is still there. You’re just trying to hide it or find a quick fix. If you don’t try to learn how to use credit cards properly at an early age, you might find yourself in trouble in the future.
You must learn how to manage debt.
Credit card debt is one of the most common forms of debt for 20-somethings next to student loans. Instead of blaming the world for your problems, it’s recommended that you learn how to deal with this debt. Cutting up your credit cards and complaining about credit card companies will not help you learn how to deal with credit and debt.
Credit cards can help you build your credit score.
A while back I wrote a piece on how you can build amazing credit. A major part of building your credit score involves using a credit card wisely.
Allow me to re-post my original breakdown of your credit score:
- 35% Payment history. Your ability to make credit payments when you’re expected to.
- 30% Amounts owed. How much credit you owe compared to how much money is available on all of your accounts.
- 15% Duration of credit history. How long have you had credit available to you? How long have you been paying your credit card balance off on time?
- 10% Recent credit. The amount of new credit available to you compared to credit that you’ve had in the past. Closing down a credit card can affect your credit score in the short term at this level.
- 10% Sources of credit. This is based on the different types of credit that you have used over the years.
As you can tell from reading the breakdown of a credit score, your credit card can be a great financial tool when used properly. Now I realize that it’s easy to mess up when you have a credit card in your wallet that you can use on anything you want. The thing is that you need to learn how to use a credit card now, or else you’re going to struggle with credit for a long time to come.
That’s my stance on why you shouldn’t cut up your credit cards.
Where do you stand on the whole credit card issue? Do you believe in using a credit card or no?