It’s tempting to think you’re in the minority of credit card users that can “hack” and “churn” their way to reward point nirvana, but if you’ve been guilty of any of the following, it’s time to get rid of them:
- Said the words, “There’s room on the credit card…”
- Saying this creates a pattern of behavior that keeps a running balance on your cards. If you have a maxed out $1,000 card, you’re likely paying $240+ a year just to carry that balance.
- Carried a balance (was charged interest) for more than one of the last 12 months.
- One month is a slip-up. No biggie. Take your lick and pay it off next month. Two months is a pattern and should be violently uprooted before it causes damage to your life.
- View the credit card as your “emergency fund”
- What if the emergency is losing your job? Now you’ve maxed out your cards and have no way to pay it back. Not a good plan. Instead, have a cash emergency fund of a few months expenses.
- If you don’t always have more in your checking account than balance on the card(s). [Aka, if checking account has $2,000 balance, and credit card has statement balance of $2,500…no bueno]
- Never ever carry a higher balance than the cash you have. You are asking for “Murphy” to curb-stomp your financial life.
If the opposite is true of all the above, then go on your merry way. You’ve proven yourself capable of using a double edged sword without injuring yourself, and can be trusted to continue to do so. Otherwise, you should go full Dave Ramsey on those cards and get them paid off as soon as possible.
It may be a difficult choice, and it may seem like an overreaction (you ARE a “responsible adult” after all) but I am telling you right now, if any of the above are true it’s time to say goodbye. Grieve if you must, but treat credit cards like what they really are: a tool that you have misused and cannot handle.
P.S. This is day 20 of 30 in my challenge to write every day for 30 days. How have you been enjoying it so far? What would you rather see? DM me on Twitter @Josh_M_Newman if you want to chat!