DH = Dear Husband
DD2 = Dear Second Daughter
I was certain that in my debt reduction efforts this summer, I would cut my credit card. It didn’t happen.
Why did I want to make the cut?
1. I’m following Dave Ramsey’s advice in getting out of debt. He says, “Stop using credit cards.”
2. Statistics indicate that people spend more when they use credit cards.
3. Studies show that people pay less attention to price and that they forget how much they’ve spent when they use credit cards.
4. Points and rewards offered by credit card companies distract us from the consideration that if we used cash instead of credit, we’d spend less and save more real money than any points could be worth.
5. Credit card companies make their profits from people who get sucked into credit card debt – and stay there.
What were my obstacles to credit card cutting?
1. DH isn’t for it. He recognizes the pitfalls of credit cards to society in general, but like many people, he believes that he is winning the credit card game:
-He pays off his cards each month.
– He doesn’t believe that he personally spends more because of his use of credit cards.
– Credit cards allow him to travel and to buy online conveniently.
– He takes advantage of the points he earns.
2. In order to get a Visa debit card, I would have to open an account at a bank that charges service fees. At the beginning of our journey out of debt, DH and I switched to PC Financial, a small bank with no service fees (See “A Mess and anEmergency”). PC Financial, unfortunately, does not issue Visa debit cards. Does it make sense to pay service fees to use a Visa debit card when we pay no interest with our Visa credit card? Probably not.
3. As DH has pointed out, the small emergency fund that we have now – $1,000 as recommended by Ramsey – has not always been enough to cover the unexpected expenses we’ve had to pay in the last year. Most notably, DH had to pay $2,500 last July because of an emergency visit to a hospital in the U.S. His credit card came in very handy at that time.
What has to happen to make “the cut” tenable?
I was surprised at how disappointed I was to concede defeat in my determination to cut my credit card. I don’t see it as a permanent defeat though. Things might change to make the cut more tenable:
1. Visa debit cards might become more common in Canada. I have learned that Canada is behind our neighbours to the south in terms of the Visa debit card. I phoned PC Financial this week and asked if they would consider issuing it. The person I spoke with said that many people had made the same request, and that he would forward mine. The day I can get a Visa debit card without having to pay service fees to do so, I will.
2. At a later stage of our journey out of debt, we will save a large emergency fund – as recommended by Ramsey. Once we have it, DH will probably feel confident enough to let go the idea of credit-card-as-safety-net in the case of unexpected expenses.
3. DH might become as convinced as I am that getting rid of our credit cards would be a good idea. I don’t think that I’ll be the one to convince him though.
I think that the main reason why I wanted to cut my credit card was, to borrow a phrase from Jack Black’s character in The School of Rock, to “stick-it-to-the-man”. I wanted to disengage from the credit card companies and their campaign to encourage consumer spending and to profit from consumer debt. DH and I responded to Visa’s “Smallenfreuden” initiative with our own “Cuttenfreuden” effort, but in the end, we won’t experience “the joy of cutting credit cards into small pieces.” At least not now.