Dancing With the Devil

Credit cards are evil. Plain and simple. The industry makes money by charging broke people large interest rates to carry debt that they might never get to pay off. According to creditcard.com, Americans have more than $1 trillion in credit card debt, or $5,600 per US adult with a credit card. According to Credit Karma’s credit card pay-off calculator, a person holding that amount of credit card debt at 20% annually who pays just $100 per month towards that debt would need 13.5 years to pay it off. They would ultimately pay $11,000 in interest in addition to the $5,600 principal owed. That is one expensive loan!

Dave Ramsey says that one should run like a gazelle when a credit card offer (the cheetah), shows up in their mailbox. Yet, I did the exact opposite. My wife and I started hard-core budgeting last year, and we’ve been doing a pretty kick-ass job of staying the course and meeting our savings goal since day one. Our original first step in budgeting was to consolidate our purchasing to debit only. Either we have the cash, or we don’t buy. I know this is something Dave Ramsey would very much approve of… but he would hate my next step.

Once we proved to ourselves that we had the money to live fully off of our cash account, we decided to look for a credit card with an appealing cash back offer. Yes, I understand the psychological pull to spend more when it is on plastic vs. cash, but we were living strictly by our monthly budget, and we would know if things got off track. After some extensive research, we finally landed on the Citi Double Cash credit card. The card gives you 1% at purchase, and 1% at payment. Since we would always pay the card in full, we’d get 2% monthly on everything we bought. 

The card has been fantastic. We started in September, 2018, and we have received $600 in cash back since then. The money is going straight into our vacation fund, acting as a reward for “good behavior” in budgeting and managing our personal finances. 

While we love this strategy, we know it is not for everyone. If we mess up just one time here and get hit with a late payment fee, we’d be down a cool $35, never-mind the hit to our spotless credit. Also, if something happens and we’re unable to make the monthly payment in full, the interest payments would quickly eat away at that $600 we’ve made from having the card. While we understand these risks, we do love seeing the cashback mount up on this card every month!

We do not endorse getting a credit card. In fact, for most folks the risks far outweigh the rewards. If you are considering a card anyways, please consider applying for an Amex through this link, as we’d get a referral bonus if you’re approved (only great to excellent credit applications are usually accepted for these cards). 

As always, remember that you’re dancing with the devil when using credit cards. These are not friends helping you out of a bind. They’re counting on keeping you in debt at high percentages for as long as possible. As Dave Ramsey likes to say, if you don’t have the cash, you don’t need it (or can’t have it)!