Wednesday, November 12, 2008

Credit Cards are Useless

The Difference Between Credit Cards and Savings
Most people don’t understand the importance of having a savings account, instead of using a credit card. Credit cards are usually the root of financial hardships, and having a savings plan is the key to success. A common excuse why people don't save is because of the false sense of security provided by credit card safety nets. If an emergency were to arise, credit cards are commonly used instead of emergency funds, because they are easy to acquire, and can provide large spending limits if needed. Unfortunately a credit card is not really a form of payment; it is only used to prolong the due date, for an aditional nominal fee. Using your credit card regularly is like pouring gasoline on a financial fire, and does more harm than good.
Rewards Cards
It can be argued that using a credit card with rewards like frequent flyer miles and cash back bonuses are beneficial. In reality, most rewards only pay 1% for every dollar spent, and only the 40% [bankrate.com] of people that pay off their credit card every month will benefit. If there was a slot Machine in Vegas that only accepted hundred dollar bills, and 60% of the people lost, and the other 40% won $1.00, most people wouldn’t play.

Building Credit
Another argument is that credit cards are necessary to establish credit when buying a car or house. If you are unable to manage your credit cards, you shouldn’t be buying a car or house anyway.

I can't afford to save
People always say that they have too many bills to save any money. By establishing an emergency fund, you are actually able to pay for the problems when they occur, instead of just putting them off and hoping to have more money later. If you are not able to set aside some money each month, than you are living outside of your means, and more prone to problems anyway. By not saving you are just continuing to dig yourself a deeper grave.

Just Say No
Basically the only way to get a handle on your finances is to save, and the only thing credit cards are good for is scraping frost off of windshields. Stop Using Your credit Card Now!!!!

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