I gave up my credit card about 7 years ago. I had just left my first real job after being there a decade. My income had gone to zero and whilst I figured out what to do next it just kind of felt right.
I used to hate getting the monthly statement, this month it was $5,000, last month it was $7,000. I often wondered how did it get so high. I found it harder to stay on top of. That was the first catalyst for me to do the banking map . It really provided a sense of relief to take back control of my money.
As my income returned and grew, I never went back, I still remember the anxiety about how much the payment would be this month vs. the last. I’ve done the maths too, on what I need to spend to get value from the points vs their fees. There is a slight positive, but its not worth it to me, and I always come back to there is a reason the banks make a huge amount of money on credit cards and why they always push the limits up.
Another really big lesson, when I use my own money from a bank account I am less likely to spend on that discretionary item – I think twice about it. That consistent saving alone, gives me a much better return than the points.
That’s what’s right for me, it certainly is not what every client I see does. When clients want to use credit cards I try to get them to be clear on what expenses are OK to go on the credit card – have a good relationship with your card (typically I encourage the avoidance of discretionary spending on cards – use it like a fixed account).
We’ve seen so many clients come to us with a lot of money on their credit card, it can be hard to battle back from and take years, it just builds up to get through exams, college fees, moving, life – It happens. If you want to use a credit card, I always think – make it work for you, have a discipline around it. If there’s a lot on there, seriously I’d get rid of it and start again, start a banking map and go from there.