Saturday, August 21, 2010

Ditch that Credit Card

I had my first credit card in my early 20s. It started out with a credit limit of A$1000. I was pretty excited to have a credit card. In fact I didn't need a credit card then. I have always been a wise spender. My bank just offered me one and I simply thought, "Wow! They offered me a credit card". I felt like I was specially treated. Yeah I was perhaps a bit naive.

The credit came with rewards points. So I started using it to accumulate the reward points. The credit card had an annual fee and the rewards points feature also charged a small amount of annual fee. I was enticed by the rewards points and kept using the credit card even though I didn't need it. The reward points would expire if not claimed within a certain period and the points I had accumulated over a period would be so little that they would just expire before I could claim anything. In 10 years I only successfully claimed reward points once. I could manage to get a kid's watch for my niece.
I kept the credit card for almost 10 years. At the end of each month, I used to pay off my credit card in full by the due date to make use of interest-free period. I was using it responsibly but still wasn't benefiting from it. Even when you use it responsibly, sometimes you forget to pay it by the due date and that's good for the bank. The bank increased my credit limit several times and within 10 years I had a credit limit of A$13,000. Then one day I just decided to ditch it. I had enough money on my own to make purchases that I needed. So why use the bank's money and pay the annual fee and reward points fee?

When I look back, I feel I have made a very good decision by getting rid of my credit card. Banks don't issue credit cards for your sole benefit. They make you use it as much as you can and make you pay the interest. They would love to see you in debt forever.

Everyone's situation may not be financially sound. Some people may be struggling financially and they need to keep a credit card to make ends meet. If you really need to have one, make sure you shop around for the best deal that suits your situation.

Start thinking about saving a little from your weekly pay if you are not already doing that and keep impulse shopping under control. Learn to use your own money and very soon you will be able to ditch that evil credit card of yours too.


  1. Great advice! I think they should do credit card/financial awareness education in highschools/colleges and make it mandatory education! It can really get out of hand quickly if you're not careful! i'm your newest follower from Blog Frog! Nice to meet you! ~Kimberly

  2. @Kimberly: thanks for your comment. It would be a good thing to have financial awareness education in high schools but I doubt the government and the big corporations will ever give it a go-ahead. They only advocate consumerism and I am sure they aren't too fond of frugal living.

    I think we have to be smart ourselves and educate our kids on these things.

  3. Well written!
    I never understood that people really don't understand what using a credit card means.
    Thanks for sharing!
    You got a new follower!

    BF greetings from Casablanca, Morocco! :)