To keep or not to keep the credit cards, that is the question. A very polarizing question. If you follow Dave Ramsey, then you know he is all about cutting up the credit cards and never using credit ever again, as long as you shall live. Bring out the Bible. The only exception is a 15-year mortgage. We follow Dave Ramsey’s plan – mostly. The zero-based budget, debt snowball, and gazelle intensity are game-changers. I subscribe to them. I live and breathe them and I believe they are our quickest route to debt freedom. BUT! And there’s a big but. We have credit cards. And I guess that makes us Dave-ish. Here are 3 reasons why we are keeping our credit cards.
1. They help our credit scores.
Our credit cards are our longest standing accounts. Sean and I have 1 credit card each. That’s 2 cards for the household. We each opened our card back in college when we were young and free. I rarely ever carried a balance on my credit card and usually paid the balance in full each month. If I’ve paid $30 dollars in interest over the life of the card, I’d be surprised. I always intended to use it as a credit score building tool, nothing else.
Sean had a 7k balance on his card when we got married. We paid it off in 3 months (power of the combined dollar). Since then, he has not carried a balance on his card either. He sees the value in budgeting and no longer uses the card regularly.
We’ve each had our cards for about 20 years, and don’t really see a need in closing them right now and maybe ever.
We don’t plan on using debt for any future purchases, but we were able to get a great rate on our recent mortgage to refinance. A poor credit score would have made that difficult. And since we are not at a point where we have a zero credit score, signifying we have zero debt, we want to keep our scores high.
2. We are responsible spenders.
I guess one could argue that we are irresponsible since we bought two investment properties when we didn’t have the cash to pay for them outright. Touché. And that good debt/bad debt argument is a whole different discussion that I’ll save for another time. What I’m saying is, we don’t use the cards often or to supplement our income. We budget and we don’t spend what we don’t have. Even when we’ve taken breaks from budgeting and we were spending ridiculous amounts of money eating out, we never spent more than we made. In fact, Sean’s card usage was so infrequent that the bank started to decrease his credit limit.
We now use his card to pay his monthly cell phone bill and my card is used to pay our recurring extermination bill. They are both on autopilot to pay the balances in full each month. We are comfortable with this because each bill is under $100. If we were to run into financial trouble, this is an amount we should be able to still easily cover one final month before discontinuing the automatic charges.
3. We have an emergency fund.
Because we have some cash saved, when an emergency comes up we don’t even think to use a credit card. That is just not an option.
Right now our emergency fund is only 2 months of our expenses. When we get rental property #1 paid off, we’ll take a break from debt payments, increase it to 3-4 months and then get back to debt reduction.
There you have it, the 3 reasons why we are keeping our credit cards.
I honestly think cutting up credit cards and closing the accounts is a great idea for a lot of people. Especially if credit cards are a source of your financial struggles. Cut them up and get them out of your life. For us, they have not been an issue. But if they even smell like they will be a problem in the future, I will be the first to get the scissors out. For now, we are comfortable with the decision to keep our credit cards.
My perspective may change in the future and I reserve the right to change my mind. Then I’ll be right back here telling you when and why.
What are your thoughts on credit cards? Are you able to use them responsibly or are they a source of frustration?
With Intention,
Sean and Simone
If you enjoyed what you read, sign up for our newsletter and share with a friend.
I believe that having a credit card is essential in some instances but only if you are financially responsible. I try to pay off what I may purchase with the card that month. Also we try to stick to our budget bible( I have to write everything down even a misc…category 😉) and I carry it with me everywhere so that I can check things off. I just say budget budget budget and you will be fine.
Budget, Budget, Budget! That is key, Danielle! Otherwise, it’s so easy to spiral out of control with credit card use. Gotta have the discipline or that plan is just an idea that can lead to disaster. Also can be disastrous if the bill gets too high. That’s why we only use it for small purchases each month so that our balance never exceeds $100. In case of emergency, that shouldn’t cause us problems and we should be able to quickly and easily pay it off.
That’s awesome that you carry your budget along with you! A sure way to keep things on target. Thanks so much for reading and commenting! We appreciate you.
You guys sound like a reasonable couple that knows how to responsibly spend and receive the perks and benefits of a credit card. On the opposite side of the spectrum, there are people that think you can swipe away without any consequences. Getting the latter of the two to read this article would be very beneficial! You two know the keys to frugality!
Thanks so much, Tyler! We try our best to be responsible with credit cards but we also realize how easy it is to fall into the rabbit hole. That’s why we are intentional to not charge much. Honestly, we don’t even have cards that have those perks with points etc. Don’t want to get caught up in that either. Hopefully, the article helps those on the other end of the spectrum who could use the perspective too! Thanks so much for reading and commenting. We appreciate you!
I it’s a solid decision. Especially if you’re responsible with them. We never know what the future holds and don’t want to shoot yourself in the foot by limiting your options in the future.
I grew up adverse to credit cards. My parents had credit card debt, and while and after they paid it off, they burned into my mind that credit cards were evil and that I should pay cash for things. This mindset stuck.
For the most part it has helped me stay out of debt, but it did hurt me in my mid to late twenties because I had no good credit. We just started travel hacking and it took some getting used to using credit cards for all our purchases. I was nervous about it, like handling a weapon almost. But we pay them off in full right away. I don’t even wait for the due date, I just do it on the spot.
Sounds like you guys are very disciplined. I think your parents’ lesson to you was a good mitigation strategy. I’m still a lot leery of them and that’s why we don’t charge much. My fear is that I charge all of my monthly expenses and then for some reason that next paycheck doesn’t come. Then what? That’s the vision that keeps me in check.
I’ve heard about this travel hacking and points to get free stuff but my reluctance never let me look into it. If you have an article on yor site would love if you could drop me the link so I can see how you and your wife do it. Or, perhaps a future article? 🙂
Thanks for reading and commenting. Appreciate you!
For sure. Yea an article would be a cool idea. If I did one I think I’d take a trip and go step by step on the process…I haven’t yet utilized the points/miles, I’m still in acquiring mode.
Here’s the one I read by choosefi before jumping in. I also listened to their podcasts. I read through all the parts: https://www.choosefi.com/travel-rewards-part-1-free-travel-around-world/
Then here’s a classic from Mad Fientist who I think paved the way years ago:
https://www.madfientist.com/travel-around-the-world/
Good stuff! Thanks for the info, love finding new content. Will definitely check out these sources. As timing would have it, just checked the mail and I received a $20 rewards check from my credit card company today. Didn’t even know I was in that program. And this is how it starts. LOL. Have a great weekend Noel!