A Credit Card Is Not Your Ticket To Financial Freedom
One of the inaugural questions on Moolanomy Answers was asked by Scott, “How old do I have to be to get a credit card?“. The interesting part is how he worded the rest of his question: “I am 15 years old and I can’t wait to get my own credit card. I really want to have more financial freedom, so I was wondering what the minimum age for getting a credit card is?”. A comment like this makes it clear that we are doing an inadequate job of educating our youth about money.
Photo by Classyshot via Flickr
Misconceptions About Credit Cards
Frankly, I am not surprise to see so many children and teens equate credit cards with financial freedom. Think about it. They see their parents buy all kind of things with credit cards, but how many actually see their parents pay these credit card bills at the end of the month? As a result, some of them believe they can buy whatever they want with credit cards. Perhaps this is why millions of Americans are mired in credit card debt.
On the other hand, there are people who used credit cards and got hurt. They swear that these little plastic devils are one-way tickets to financial hell. I do respect their decision to stay away from credit cards. Unfortunately, this is like avoiding power tools because they are more dangerous.
Credit Card Are Nothing More Than Financial Tools
Credit cards will not help you achieve financial freedom, nor will they send you to financial hell. They are simply financial tool that must be used with care. There are pluses and minuses to consider, and when used responsibly credit cards can make your life easier.
Benefits Credit Cards Offer
- You can use credit cards at more places — e.g., online purchases, etc.
- Certain things just work better with credit cards — e.g., automatic bill payments, etc.
- You get to enjoy cash back bonuses and reward points that certain credit cards offer.
- It’s easier for you to keep track of your purchases.
- It’s safer than carrying around cash.
- You are better protected against fraudulent purchases and you can often get your money back.
Additionally, there are other benefits depending on the specific card that you use.
A Few Reasons Why You Should NOT Use Credit Cards
- You could end up with credit card debt.
- If you carry a balance, you could end up paying a lot of finance charges.
- You could be hit with expensive fees — e.g., late fees, annual fees, etc.
- You could spend more by using a credit card instead of cash
Whether you choose to use credit cards or not, it’s up to you. The important thing is to never equate credit cards with financial freedom.
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credit card bills, financial tool, financial freedom, reward points, automatic bill payments, Financial Education, credit card debt, Credit CardRecommended articles
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This information is very helpful! I’m currently writing a book about budgeting and to have included some of this information. I think that if people really think about it they will realize that credit cards are nothing but a waste of money. Sure it allows you to buy things that you would not have been able to buy if you do not have the cash money, but I grew up with parents that always said if you don’t have the money to pay for it , you do not need it. I bet a lot of people wish they had that little bit of advice before they got into these financial situations. Great read!
I saw this question as I was browsing too and I wanted to give the asker a (friendly and brotherly) slap on the back of the head. So misguided (and I’m sure it’s not entirely his fault) but thanks for bringing the point up!
Excellent piece! So often we think of a credit card as money that is available for us to use to buy things, much as we think of money in a checking account. Unfortunately, this is not the case. We need to realize that a credit card represents borrowed money, not money that we already have.
Credit cards are more likely the way to financial slavery.
You said it right– they are financial tools and nothing more.
You have to be very careful with credit cards and young folks get sucked into the availability of money. BUT if a young adult had a good financial education and is responsible with credit cards then getting one early can do a lot to build up their credit history and score enabling them to get better rates on big purchases like a house or car later on.
Still, I think it’s a small minority that would benefit from this and many kids think of credit cards as plastic money that can be spent at will.
very well said.. it is interesting to know that inspite of such grief caused to so many of us by credit cards people still want to own for “financial freedom” sake. Credit card companies want the population of this segment to grow so that they can keep making money at their expense. Credit cards are good tool if used with care.
The article, “A Credit Card is not Your Ticket to Financial Freedom” and in my opinion the title says it all and definitely speaks the truth.
Credit cards are just a tool and should be paid off at the end of each month to avoid additional bank charges and fees. Unfortunately, many people have misused this tool and live beyond their income (instead of below their income) and are in debt.
Clear and concise. So many think credit cards (credit of all kinds for that matter) can be the answer to financial problems rather than researching the dangers (yes strong word but true) of credit cards and the potential to increase debt.
This is the mistakes that alot of persons make where credit card is concern. Some parents does not teach their children about the advantages and disadvantages of having a credit card and the responsibilities that comes with it. My Aim and Objectives is to teach high school students about financial freedom by helping to implement a National Financial Programme in schools.
Good, relevant and basic information on the value of Credit cards. By the way, I was watching a financial/business TV show the other night and this person made a killing by financing his business with credit cards. I do not encourage this if you do not know what you’re doing. But for some folks, credit cards do provide opportunities.