Under Obama’s new credit card law, consumers are supposed to benefit. Long tired of being ripped off by credit card companies over and over again, many consumers have said “Enough” and supported the new bill. In hindsight though, for many credit card customers, the new bill won’t help much and, in fact, it may just hurt. Already credit card companies are starting to increase interest rates (which can be done under the new law as long as you give the customer enough time to turn the new interest rate down and close their account) and, over the next few months, more provisions of the law will begin to take effect which, too, will also benefit the credit card companies. So, if you have a credit card and are sick of being ripped off by the credit card companies, now is the time to cut it up and here are five reasons why.
1. Interest Rates are Too High – On most credit cards, interest rates are simply too high. Many consumers start off at a normal 6.9% rate and, after one late payment or one credit card bill not received and therefore not paid, they soon find their interest rate has increased to more than 30%. To avoid these exorbitant (and scam!) credit card interest rates, cut up your credit cards now. Just think about it. On a low balance of only $1,000, you’re going to be paying $300 a year on a 30% interest rate credit card. That’s a car payment, it can buy you a new flat screen TV, pay a medical bill, or even buy a plane ticket to many places within the US. Why give that money to a credit card company when you can use it for something to benefit you?
2. Cash is Easier to Keep Track Of – The problem with credit card bills is people spend too much money on them. Just whipping out that piece of plastic doesn’t feel like spending actual money, so the charges mount up and it’s a shock the day the bill arrives. I have absolutely no credit cards, only one debit card, and I pay everything in cash. I withdraw enough money when I get my pay check to pay my monthly bills and enough money to spend on miscellaneous expenses through the first half of the month. On the 15th of the month, I withdraw enough money from my bank account for the rest of the month and, when that money is gone, it’s gone. Buying everything in cash teaches you to watch what you spend and to budget. Since I instituted this plan a few years ago and cut up all my credit cards, I’ve remained completely debt-free and save well over $500 a month – every month.
3. Credit Cards Aren’t Necessary For Shopping – As I said, I pay everything in cash. Rent, monthly utilities, cell phone bill, cable TV bill and all my public transportation costs. I live in Thailand, so it’s easy to pay everything with cash, but it can easily be done anywhere else in the world too. I cancelled all my credit cards several years ago and don’t miss them. I use one debit card for ordering things on the internet, renting a car, or a hotel room and that’s sufficient – don’t need anything other than that and neither do you. So cut up your credit cards and cancel those credit card accounts. Cash is king. Really.
4. Credit Cards Damage Your Credit Rating – A lot of people, myself included, originally took out credit cards to boost our credit rating. Years later, we realized having those credit cards was actually damaging our credit rating. One late payment and it’s on your credit rating. One problem with your credit card company and it’s on your credit rating. Plus, if you have too many credit cards, that too damages your credit rating. If you have credit card debt problems, cut up your credit cards and work on paying off your debt. You’ll soon find your credit rating improves and you’ll be less stressed, not having to worry about possible late payments or a late fee.
5. Frequent Flyer and Other Bonus Programs are Mostly Scams – Many credit card companies advertise frequent flyer credit cards, cash back credit cards and other bonus programs – all in the hope of getting you to sign up with their company. In reality though, most of these bonus programs are not worth it and, in some instances, are even outright scams. On frequent flyer credit cards, you pay a high annual fee. On top of that, many airlines will only honor those frequent flyer points at certain times of the year and for certain flights. Cash back bonus programs also often have an annual fee and higher interest rates. One late payment and not only will you not be getting cash back, you’ll be paying the credit card company more too.
The only way to be a responsible consumer is to cut up your credit cards and close your credit card accounts now. Don’t let these scam credit card companies rule your lives, treat you badly when you have a financial problem, or downright steal from you. The enormous credit card debt is one of the big reasons why America’s economy is not recovering along with the rest of the world. Don’t contribute to the problem. Help to solve it. I promise, you”ll be much happier once you know you’re beating the credit card companies at their own game.