When we paid off our credit card debt in 2012, we were elated. Paying off $70,000 was a major accomplishment for us. But we kept the cards.
What if there was a major emergency? How would we pay for it?
Then we got into the rewards trap. I loved my rewards card. We were paying it off every month and I was getting cash back. I used it for my business and felt like I was making money! We used the card more and more, justifying the use because we would get rewards. We put just about everything on the card and paid it off at the end of every month.
Until we didn’t. Almost one year to the day that we paid off our credit cards, we couldn’t pay the bill in full. I was crushed. We vowed to never get into credit card debt again but we did. After I paid as much as we could, there were only a few hundred dollars that we couldn’t pay off but it might as well have been $20,000.
That month we got back on a written budget after taking a year off. We stopped using the cards but we didn’t cancel them. In November 2013, I sent my husband a text message, “I’m canceling the card cards.” I thought he would object but he thought it was a good idea. He cancelled his cards as well.
It’s been five months and we have not regretted the decision. It has made our lives easier. No more mail from the credit card companies. No more special offers to tempt us to use the cards.
Some people think you must have a credit card, but I would argue that I can do anything with a debit card that you can do with a credit card. When we travel, we pay for the trip in advance, using a debit card. I can rent a car or a hotel room with a debit card. Yes, they will put a temporary hold on my account, but if I am so broke that I can’t afford the temporary hold, we shouldn’t be traveling. What if there is an emergency? That’s why we have an emergency fund.
We have switched our mindset. Our goal is to become payment free. Our goal is to pay for things with money we have saved. Cancelling our credit cards is probably one of the most important things we have done to work toward that goal.
When you think about canceling your credit cards, what comes to mind? What would you need to do to be comfortable without credit cards?