37 Reasons Why Credit Cards are Bad (and Ruining Your Life!)

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Credit cards are insanely dangerous.

Once labeled as a cool, trendy piece of plastic is now highly considered by many as the “cigarette of the financial industry.” Credit cards are just as addictive and seem to be destroying lives at a similar rate.

But there are a few who actively promote credit cards for various reasons: a credit score, reward points, fraud protection, or ease of use. It’s all bogus. A fraud. A scam meant to milk consumers out of their hard earned dollars and make the credit card companies rich.

So today I’m going to show you all of the reasons why credit cards are so incredibly stupid. All in all, I hope that the following 37 reasons will persuade you out of continuing to use credit cards as “financial tools” so that you can build real wealth. I mean, it’s never been easier to build wealth. But credit cards are not how you do it. Check out the list below ⬇️.

37 reasons why credit cards are bad (and ruining your life)

1. It’s all a game

This entire credit card scheme is just a big game to the credit card companies. Nothing more than a joke to the companies who are getting rich.

I mean, they’re called POINTS for a reason. You’re playing a dangerous game that the credit card companies want you to play. You get a few points and they make money. In the end, they win. And you don’t.

2. Extra effort

To me, credit cards just take extra effort when you’re buying stuff. I try to simplify my life as much as I can. But credit cards take extra effort to not just use, but to go online and pay back. It also takes a bit of work to manage your credit cards with no mistakes. So why bother?

3. What do REAL millionaires do?

REAL, Average Joe, everyday millionaires didn’t get rich by using credit cards and earning a few points. Nope, their wealth was built by staying out of debt, not using credit cards, living below their means, getting their home paid off, and steadily investing over the course of 30+ years. Do you want airline miles or wealth? Your choice.

4. It’s only a few points

If you really break it down, the credit card companies always win when it comes to rewards. Whether it’s points, dollars, or miles, you only get a few of each for how much money you spend. Normally, when you spend $100 dollars, you get about .50 cents to $1 dollar in points. So not much. And it takes a LONG time to build these up to cash in for anything of value. It’s not worth spending $100 just to get $1 dollar back!

5. Reward points can change in value

Yes, at any time, a company can change its reward point structure in their favor. So if you’re about to cash in for a flight with 40,000 points, the company could change the required points to 80,000 points and completely screw you. Then you would have to pay twice the money to get that reward. Also, don’t fall for the 1st year bonus. You might get a decent amount of rewards in the first year, but after year 1, the rewards drop off and you get next to nothing for your money spent.

6. Reward points can be cancelled

Credit card companies are clever. And a lot of the time, they put contract-voiding language into their card contracts. Some include cancellation of credit card points in that contract for certain reasons including: if you pay late or don’t pay, if they’re not used within a certain time period, or if you close out your credit card. The credit card card companies control the points. So don’t be surprised if you wake up and find out you don’t have any.

7. False promises

Whether it’s deals, signup bonuses, points, cash back, or whatever, credit card companies claim to have awesome rewards and benefit consumers with perks. But that’s a lie. Credit card companies offer false promises of luxury vacations and first class flights. You might cash in something, but think about all the effort, time, and money that went into your reward. I’d bet it wasn’t worth it. Rewards are nothing but a scam.

8. Not worth it to the average person

The average person cannot handle credit cards. Most people don’t control their finances and credit cards will take over. The average person spends too much, pays more interest than you’d make in reward points, and they don’t pay off their cards every month. If you make minimum payments, you shouldn’t have credit cards. It’s just not worth it.

9. Impulse purchases

Impulse purchases are purchases made without planning for that purchase in advance. And they’re almost NEVER a good idea. When you have credit cards, it is super easy to go out and make these impulse purchases because of how much money companies give as a “spending limit.” A lot of companies will continue increasing your limit as you continue making payments. So all in all, they encourage larger and larger impulse purchases by doing so. If you carry cash and debit cards, you can stop yourself from doing this.

10. More spending

On top of impulse purchases, credit cards always encourage more spending because of that “purchase limit.” When you carry cash, you can eliminate this increased spending. Nothing wrong with spending money, but if you have to borrow, you don’t need to spend it.

11. The Universal Default

Here’s just one other part of why I hate credit cards: the universal default. Now for those that don’t know, the universal default is a provision that is found in most credit card cardholder agreements or contracts that allows the credit card company to raise your interest rate for any mistake on your credit report.

Miss a payment? Your rate goes up. Have an issue on a bill that gets put on your credit report? Your rate goes up. Any other possible mistake that hits your credit report? Yep, your rate goes up. Just because of the universal default.

Oh, and they could raise your rate to over 30% percent! Yet another sleazy trick from the credit card companies to screw you over.

12. Huge interest rates

So here’s the real kicker: even if you have a great credit score, you can still have a high interest rate. Credit card companies teach their employees to not negotiate with consumers who call in and request interest rate reductions. So even if you have a really high credit score, you could still be paying a ridiculous interest rate over 10%.

I had an 800+ credit score and Citibank wouldn’t give me under an 18% interest rate. My wife’s card had about a 10% interest rate and that was through the local credit union with an over 800 credit score. Even if you can get under 10% interest rate, it doesn’t matter. Why pay extra interest if you can just afford to pay for something with cash?!

13. Interest is ridiculously expensive

On top of how ridiculous interest rates can be, the cost of that interest can be extremely expensive every month. If you’re not paying your bill in full, you’ll pay interest on what you owe. That means that you’ll be paying even more money for those dinners, tech gadgets, and gas that you’ve charged on your credit card. If you would’ve used cash or a debt card instead, you wouldn’t be paying interest.

To learn exactly how credit card interest works, check out this post here on The Dave Ramsey website.

14. Insane annual fees

It’s not just interest that you have to worry about. A lot of credit cards have annual fees that you have to pay just to use their services for borrowing money. So most people will have to pay interest on what they’ve borrowed. And they’ll have to pay a fee just use the card to go into debt. What a complete crock of sh*t.

15. Significant foreign transaction fees

The fees continue if you travel out of the country. Most cards charge exorbitant foreign transaction fees. So those fancy vacations cost even more.

16. The fine print

If the first 15 reasons haven’t swayed you, let’s check out another. The fine print of credit card cardholder agreements and contracts often contain language that voids out perks and rewards, punishes cardholders for missed or late payments, increases rates after the intro period, shares your information with 3rd party vendors, and ultimately favors the credit card companies in a variety of other ways. This is why you should just cut up all of your cards, pay the debt off, and close the accounts.

17. 0% percent bait and switch.

Here’s yet another scam on behalf of those “trustworthy” credit card lenders – the 0% percent bait and switch. If you didn’t know, credit cards can offer 0% APR or introductory rates and include language in contracts that can change the interest rate to whatever they want whenever they want.

Credit card companies can also advertise 0% interest, but when you apply, they only approve you for a certain interest rate that obviously isn’t 0%. Once you’re approved, you’re approved and they send you the card. It’s then up to the consumer to either cancel the card or pay the bill. If you’re not paying attention, you can get hit with all of the interest you didn’t want in the first place. So pay attention!

18. Minimum payment scam

Minimum payments on credit cards have been around for decades and aren’t likely to go away anytime soon. Why? Well, because this is how the credit card companies make their money. It might seem like they give you a minimum payment so that it looks like you can actually afford all of those things you financed. And that’s partially true. They want you to spend more because you think you can “afford” more.

But the real reason lies in truly how much money they make off of these minimum payments. Companies often make billions of dollars per year off of interest charges from minimum payments. And some issuers only set minimums at 1% or less of the actual balance every month. That means it would take you 8.33 years to pay off your balance if they did that. In the meantime, companies are charging you interest and making a killing off of you. So why do this? Why not just get rid of your cards?!

19. Credit cards promote bad habits

Whether it’s impulse purchases, overspending, or using credit cards to budget with, credit cards in general were not designed with the consumer in mind. They promote bad habits and should NEVER be used.

20. Massive debt

Because of all of the bad habits that credit card promote, credit cards often lead to insane amounts of debt. Years of borrowing can see $50k, $75k, or even $100k plus in credit card debt.

21. Too easy to borrow, too hard to pay back

Yep, if you have a $20,000 dollar line of credit, you could easily max this out in a few hours. Quick and easy, right? Well, this could take you YEARS to pay back. And if it took you a couple of years to rack up the debt, you can bet it will take you 4-5 years to get it all paid off if you never borrow again. DON’T DO THIS!

22. Bankruptcy

As the credit card debt piles up, many people feel that the only way to get out of the mess is to file bankruptcy. Sad, but true. Credit cards often cause bankruptcies.

23. Ruined relationships

Credit card abuse and misuse can lead to financial problems, bankruptcy, and divorce or ruined relationships. Most of the time, one spouse or significant others gets fed up with the debt, decides he or she doesn’t want to struggle anymore, and this throws a wrench in the relationship’s gears. Often times, years of borrowing on a credit card can put just enough of a crack in a relationship to split it in two forever.

Money fights and money problems are one of the biggest reasons for divorce in America today according to this article here on Insider.com. Also, according to a study done by Ramsey Solutions that you can read here, “money fights are the second leading cause of divorce, behind infidelity.”

24. Self control and discipline

Credit cards, on top of the other 23 reasons why they’re a horrible financial product, discourage your self control and discipline. This kind of falls in line with number 19, promotes bad habits, by encouraging the horrible habit of disregarding any self control you have. Want that 85 inch TV right now? Just swipe your card. $200 dinner at the local steakhouse before payday? Just swipe and go. No self control and no discipline to say, “no, I can’t really afford that.”

25. No budget

Using credit cards probably means that you don’t have a written budget. Most people with credit cards like to say that they use their credit card as a “budget.” But you simply can’t do that. Because every single person has many different bills that you can’t really pay with your credit card. So that voids out using the card as a budget.

It also means that, if you don’t have a budget, it’s easy to just charge what you want without even thinking about the repercussions. No budget, no worries, right?! Wrong. A written budget consists of all of your income minus all of your expenses. It’s impossible to use your credit card as a budget because it’s not your actual income. Create a budget and cut up your credit cards.

26. You can’t “live below your means”

We just talked about how you can’t use your credit card as a budget because a budget is your income minus your expenses. If you use a credit card as a “budget,” that means your credit card is technically your income (which could have a very high spending limit). That’s a terrible idea, because that spending limit is most likely going to be very different than your actual income. And if you’re spending more than your actual income in your credit card, you’re not living below your means.

Create a budget using your income minus your expenses. Give every dollar you make an assignment. Cut up your cards. And live off the actual money you make. That’s how you live below your means.

27. You’ve got the cash

The very first step you need to take when building wealth is to stop borrowing money forever. Now the biggest argument that I see against this is, “but I pay my credit card off in full every month!” That’s all good and dandy but that’s not the point.

The point is that YOU HAVE THE CASH to pay for it! Also, even if you pay it off every month, you’re still borrowing money to do so when you don’t need to. You’ve got the money so stop using credit cards, even if you can pay them off in full.

28. You can’t afford it

Next up is something pretty simple: if you finance something and have to make payments, you can’t really afford it. A simple rule to live by is, “if you can’t pay cash for it, you can’t afford it.” Use cash or save up cash and buy what you need.

29. Get rid of debt forever

If your goal is to get out of debt forever, you can’t keep using credit cards. By using them, even if you pay them off, you are still borrowing money. Time to cut ‘em up!

30. The false “emergency fund”

One of the most overused reasons for having a credit card is to help out in case of an “emergency.” Well, we all know that this is a horrible excuse to have a credit card. Emergencies change from real life emergencies to Christmas then to just using it for everyday “fashion emergencies” when you just NEED that new piece of clothing.

Parents also give their kids credit cards for emergencies and then get upset when the kid racks up hundreds or thousands of dollars in charges for no reason.

Having a credit card for emergencies is called a false emergency fund and is a terrible idea. It simply doesn’t work. The real way to handle emergencies is to be completely out of debt and have a real emergency fund fully funded with 3-6 months of expenses IN CASH. When you have that, you tend to have less emergencies.

31. Stress and financial peace

We all try to have less stress in our lives. But credit cards can not only cause more stress, they can also crush your peace of mind when it comes to your everyday life and your overall finances. Why not get rid of the credit cards and earn your financial peace back?!

32. The kids are learning bad habits

I know you love your kids (if you have any). But by continuing to use and abuse credit cards, you’re teaching your kids that this is okay behavior. They see the abuse, the stress, and the poor money habits that continue with credit card misuse. My hope is that they recognize and reject those bad money habits when they get older. But too many kids grow up learning that this is okay in life and live the same way as adults.

You’re teaching kids that using credit cards and borrowing money is okay. Well, it’s not.

33. Credit score doesn’t matter

Here’s something that a lot of people will argue over. The infamous credit score is something that has a serious grip on most of consumers in our country because a good credit score matters, right? WRONG. Credit scores only tell companies how good you are at borrowing money and paying it back.

It’s like a huge circle. You borrow money and pay it back to get a better credit score. You get a better score so that you can borrow more money to pay it back to get a better credit score. And on and on it goes. Most people get trapped in this cycle and can never get out.

Lastly, since a good score is simply how good you are at borrowing money and paying it back, you can be completely broke with a really high credit score. If you don’t borrow money at all, you could have millions of dollars with a horrible credit score or no credit score. It’s all just a huge scam.

If you’re curious about how to live without a credit score, check out this post here on Dave Ramsey’s website.

34. Identity theft pt. 1

This is actually applicable to both credit and debit cards. But you’ve got to have a debit card for actually spending money (unless you use cash only – either is fine).

On the negative side, the more cards you get, the more likely that you’ll be the victim of identity fraud. So if you use credit cards for rewards, or just building up your credit score, you have a higher chance of becoming an identity fraud victim. Stick with just a debit card and you should be fine.

35. Identity theft pt. 2

Identity theft can be tough to deal with if someone charges money to your a credit cards. Most card companies make you jump through a bunch of hoops if someone charges money to your account or uses your account for any fraudulent activity. It took weeks to resolve a single fraudulent charge on my old CitiBank card. It was ridiculously annoying and made me think twice about having extra cards.

36. Predatory lending

After all of the previous 35 reasons why you shouldn’t use credit cards, hopefully we’ve swayed you on why they’re bad. These cards have high interest rates, high fees, crappy rewards perks, and were created for credit card companies to make money. So they take advantage of as many people as they can with their predatory lending practices. Credit cards were not made for the consumer. You don’t win. And this is not how you build wealth.

37. The companies are getting richer

While broke people suffer and dig theirselves deeper into debt, the credit card companies are building skyscrapers that keep getting taller and taller. I’m telling ya’ now, they aren’t here for you. They’re in business to make billions of dollars while you struggle to make ends meet. But it doesn’t have to be like this. You can end the cycle.

Finally

You can do things differently and live life without credit cards. If you’re deep in credit card debt, I just want you to know that many people have been in your position. They were struggling, but they’ve worked their way out of debt. Now they’re living a financially prosperous life without credit cards. That’s what I’m doing and it’s amazing. Why not give it a shot?