How Credit Cards Can Ruin You (and how they can be a great resource)

Doomsday title? Yeah.. It is. Now, that being said, I am not a Dave Ramsey purest who thinks that all credit cards in every situation are evil. I think if someone is responsible, they can actually be quite good. But, if you’re the type who’s inclined to make minimum payments or have the, “oh, I’ll have the money at the end of the month” mentality, stay the hell away.

A recent study from US News found that most Americans don’t have a clue about the first thing when it comes to credit cards. I remember there was a commercial a few years back that depicted people flaunting their new purchases, from computers, to new shoes. When their friends complimented them for what they bought, they said things like, “Thanks, it’ll cost $x after I pay all the interest on it!”

I loved this commercial because it really spelled out how incredibly awful paying minimum payments can be! I saw this on Facebook, and, while cutesy and funny, it’s totally true!

So, in an effort to clear up some myths, I worked with some of US News’ resources to help you along the way. If you’re considering opening up a credit card, PLEASE read on. I often take for granted what my dad taught me (something akin to, “credit card= swear word”), so I feel the need to spread the love and the valuable information.

Here are some ways that credit cards can ruin you. Mind you, I’m not demonizing them.. I have two, to be honest, but I am constantly aware that they are loose cannons if I don’t have self-discipline. Read on…

You don’t know your credit score.

Guess what pals? Even though Dave Ramsey argues against the necessity of a credit score, this is one area I very, very much disagree with him on. When I bought my condo a few years ago, I was able to get the best of the best interest rate on my mortgage because having a high credit score is very, very important to me. This is true for credit card interests as well. If you have crappy credit, you will get crappy interest rates, which means you have potential to pay hundreds of unnecessary dollars if you accidentally miss a payment or miscalculate and don’t pay in full one month (for example). If you have poor credit, work on improving it through paying your utility bills in time, maaaaaybe open a gas-only credit card and pay that pup in full every. single. month.

You get docked with an annual fee.

Sure, reward cards are great in theory.. but is it really a reward if you end up paying $550 a year for the honor of holding the credit card in your wallet? Absolutely not! Read, read, read the fine print. You do not want to get slapped with one of these, especially if you can’t pay it.

That being said, some fee-based cards are worth it. I have a Southwest Rewards credit card and the $99 annual fee is NOTHING compared to the thousands of dollars I’ve saved in airline travel from having the card. I loooove Southwest Airlines in general and accumulate points like crazy. I am very, very careful to pay it in full each month and have yet to accrue interest on it. (PS- if you sign up through the link above, you get 40,000 bonus points)

You have too many credit cards open.

I’ve been totally guilty here. It’s so much easier to see two $200 balances than it is to see one $400 balance, amiright? If this is an issue for you, cut one uppppp. If there’s an annual fee on that one, go ahead and cancel it. Or, what I do is keep one out of my wallet, so I’m forced to use the other one. Oh, which brings me to my next point.

You store your credit card information on your computer.

No one is more of a sucker for Amazon try-on hauls than this girl. A blogger posts something about Amazon clothes, and I’m immediately clicking on all the things… I’m actually wearing an Amazon try-on haul shirt as I type this. What I do not do right away, however is buy ANYTHING online without thinking about it for a while. By default, not having my credit card stored on my computer or phone makes me think about purchases before I make them. Don’t make it too easy on yourself. At the very least, force yourself to walk across the room to get your purse. If you have your credit card stored on your computer or phone, I challenge you to delete it NOW!

You focus too much on rewards.

Now, no one loves a free flight more than this girl. My Southwest credit card has allowed me to visit my family in Florida more than I otherwise would, my friend in Houston, and a nice trip with the manfriend to San Diego last summer.. That being said, I have to always keep in check whether or not I’m focusing on the rewards maybe a biiiit too much. If it becomes the focus and I’m putting things on my card that don’t need to be on it (I’m looking at you, toothpaste that I could have easily paid cash for), it’s time to call it quits.

Alright, friends! I hope you found these thoughts helpful! Do you have something to add? Please comment below!