The Absolute Best Way to Use Your Credit Cards Responsibly

Personal finance bloggers, writers, and TV personalities love to talk about credit cards.  I hear and read them give advice about using cards in ways that will maximize your credit score, they tell you how to find the “Best” cards for you, and they give you info on how to get the most lucrative credit card perks like airline miles and cash back.

Most of these gurus generally give good solid advice (for those that use credit cards), and most people need good advice when it comes to using credit cards in a responsible manner, because when it comes to using credit, the average American is using a lot of it.

For Example:

  • The average American family carries over $15,700 just in credit card debt.  That doesn’t include other types of debt like car loans, mortgages, or anything else.
  • They have an average of 13 credit obligations that include all types of debt.
  • 51% of people with a credit card carry a balance from month to month, incurring interest and fees associated with that balance.
  • 40% of Americans spend more than they make every year.

When you see these numbers it’s easy to understand that most of us need help when it comes to managing our debt load and the bondage that it can inflict upon our lives.

When it comes down to it, if you have credit card debt (or any debt for that matter), especially a lot of it, you are losing with money.

Most people with credit cards don’t pay them off every month and the credit card companies like it that way.  They are always out to get you with interest, fees and any other method they can use to separate you from your money.

Even if you are diligent at paying off your balance every month, if you just slip up once and you’re late with a payment or you accidentally go over your limit, the fees will cost you.

One of the other hidden problems with credit that most people don’t know about is the fact that since swiping a credit card is so easy and frictionless (It doesn’t feel like real money), you actually end up purchasing 12% more stuff than if you had just paid cash.  That’s like a 12% tax on all your credit purchases.  Add to that the interest and fees that come with using credit and you quickly see that using a credit card may not be the best way to make a purchase.

The marketing of credit in our culture is so prevalent that these companies have convinced the vast majority of Americans that they can’t do without it.

Of course this is a lie.

When it comes down to it, credit cards are a bad deal, and when you make a habit of using them you are losing with money.  It’s as simple as that.

You don’t need them, no matter how much they have tried to convince you otherwise.

You can lead a cash only lifestyle that will help you spend less and not waste money on interest, fees, and unnecessary purchases.  Going cash only is not hard to do, you just have to commit to being a little different than the average consumer.  And after seeing the stats above, I’d say average is a place that not many of us really want to be.

If you’ve ever read my blog, you know that I absolutely hate credit cards and debt.  They are a burden that you don’t need in order to succeed in life, and they will only serve to drag you down financially.

So because of what I’ve learned about how credit cards and debt really work, I’m convinced that the absolute best way to use a credit card is to never use one at all.

Dr. Jason Cabler is a practicing dentist, Christian personal finance blogger, and speaker from Nashville, TN.  He loves to write about becoming debt free and living a debt free life on his blog, Celebrating Financial Freedom.

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14 Responses to “The Absolute Best Way to Use Your Credit Cards Responsibly”

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  1. Love it! Christmases are going to be great for you every year!

    • Yes they are, Christmas is cash only every year! We just put back Christmas money in an envelope every month and when Black Friday rolls around we’re ready for the deals.

      Interesting note. The picture of the ornament was added by Brad (Owner of EOD). Its an actual ornament on their tree that contains their cut up credit cards.

      • Brad Chaffee says:

        Yessir! We cut those babies up back in 2008 and haven’t looked back since. It has been super and believe it or not we are still alive and well contrary to popular opinion. haha!

        Credit Card Hunter

  2. Kevin Vesga says:

    IMHO, the title is somewhat misleading. I thought maybe this article would discuss credit card rewards and using credit cards for small purchases and paying it off monthly. In other words, actual responsible usage. Not avoidance.

    • Ok, busted. I did mean for the title to be a little misleading, but in my opinion not using the plastic demons really is the best way to handle your credit.

      I have a new post coming up on my site that covers some great alternate ways to use a credit card that you might enjoy also.

      And yes, that title is a little misleading as well. Sorry!
      The link will be live on Tuesday 2/28.

    • Brad Chaffee says:

      Hi Kevin, with all due respect there’s a very big reason you won’t find articles like what you mentioned on Enemy of Debt. People in debt do not use credit cards responsibly in most cases, hence the debt problem. People come here (hopefully) to change their financial behaviors and I am not interested in promoting one of the largest contributors to consumer debt in this country. Those that can use them responsibly, quite frankly, don’t need a blog like this to tell them how.

      Trust me though, there is no shortage of PF blogs that pimp and promote their favorite credit cards and rewards programs. Personally I think credit cards are trouble but I definitely acknowledge that there are a slim few out there that can and do use them responsibly.

      One question though. What do credit card rewards have to do with responsible credit card use?

      Plus a post about actually using credit cards responsibly would be too short. Here it is, you ready?

      Spend less than you make and pay off your credit cards every single month.

      No secrets or tips really to doing that. 😀

      • JMK says:

        Yes it would make a very short article. You missed the last item thought, collect rewards! For those of us who use a card for everything, and pay it off immediately (I do it weekly), it mostly about the rewards. A normal week for us is just groceries and gas. Most of our utilities and insurance automatically charge to the card (so they’re never paid late). Getting flight miles in our case for doing precisely what we’d do anyway is the benefit. Last year we got free flights for the four of us to New Orleans and then San Francisco. This summer it’ll be somewhere in Europe.

  3. Dave Hilton says:

    I used to agree with your conclusion 100%.

    Now…I’m not so sure avoiding credit cards is ALWAYS the best answer- for me. Although, it may be the better option for you.

    I’m currently assessing some of the financial “absolutes” and other biases I’ve been carrying around in my head for the past 10 years. The results of my analysis so far are not what I expected.

    • Brad Chaffee says:

      There is certainly no one size fits all when it comes to personal finance so I understand your feelings. Personally I feel if you can and want to use credit cards responsibly go for it.

      My view and opinion about credit cards mostly challenges the status quo and the way people typically view credit and it’s importance. Credit cards are not a necessity like they are believed to be by the majority. They are simply a spending tool that can be abused. The guest author seems to share my opinion as well but I’m sure he’d agree that our avoidance approach might not be for everyone.

      I really don’t see the point in them especially with the risk that seems to surround them. For most people credit cards should be avoided at least until a substantial level of control has been achieved over spending habits.

      Now that I have that control I don’t really see why I need them at all. I don’t have any nor will I ever have one in the future. 😀

      Thanks for the great comment Dave.

      I’m curious. What triggered a change in opinion for you?

      • I do agree, since we paid off all of our debt (except for the house) there has been no real need for any cards. We budget for everything and just use cash, so we are guaranteed not to spend more than we have. It’s just a nice built in safeguard that ensures you don’t get temporary insanity and run up a card because maybe you’re in a tight spot.

        When you have gained control there’s no need in risking losing control again by using someone else’s money.

  4. Vincent says:

    Hi! I fully agree with your post. I am an immigrant (from France) and we are used to live without credit. Since 2008 I managed to live without any credit at all (the counter part is that everybody was asking me huge deposit: mobile phone, TV, landlord…). Now, I am thinking of buying a house and this is where I realized that without a credit score, I’m done. So yep, I signed for a secured credit card and I will try to build my credit history as many americans. No other choice. I’m sad.

    • Brad Chaffee says:

      Hi Vincent I’m sorry to hear you got a credit card in order to “build credit”. If you have been responsible without debt and can prove it, you don’t need a credit score to buy a house. Check out this post:

      Your Credit Score — It’s Not a Measure of Financial Responsibility

      getting a house without a credit score is a little harder but much more worth it in the end. Hopefully one day people will refuse to play the credit score game eventually rendering it useless. I will not be getting mortgage anyway but if I did plan on buying a house with a mortgage I would definitely not be getting a credit card in order to build my debt.

      Good luck Vincent and thanks for sharing your thoughts man! 😀

    • You can still get a mortgage. Just search for a mortgage lender that does “manual underwriting”. Not all lenders do this. They will ask for more documentation than usual and you may have to pay a slightly higher rate, but it keeps you from having to manufacture a credit score just to get more credit ( a crazy cycle).

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