Credit, Top 10

Top 10 Ways To Save Money – Number 3 – Avoid Paying Credit Card Interest

On February 6, 2006, I made the final debt reduction payment and finished paying off all of my debt.  Since then, I’ve been living debt free.

I do not make monthly payments to creditors.

I do not pay interest to credit card companies.

I am free to do what I want to do, when I want to do it, with my money.  Life is good.

I loathe the thought of paying interest.  I spent 15 years of my life paying interest – on cars, trucks, furniture, appliances, clothes, food, and dozens of other silly things.  Now, however, if I don’t have the money to pay for an item, well, I just don’t buy that item.  I have to wait until I can actually afford it and then I buy it, with cash.

(This is a novel concept, I realize, and one that has been soundly rejected by both our federal government and both major political parties, but I digress.)

Do you want to save some real money?  Then, get out of debt (especially credit card debt), learn to live debt free (with a long-term plan for remaining debt free), and stop borrowing money (and paying interest).

Now, there are those who will reject my idea of paying cash and they will extol the virtues of credit cards, with low interest rates, and the power of using other people’s money.  Hey, I’m cool.  If others want to borrow money, that’s fine by me, but I don’t want to use other people’s money, I want to use my own.  And yes, I am aware of the thirty-day float afforded to those who use credit cards… and the five percent back that you can get with each transaction… and the security features.  I still don’t like them, I don’t want to use them, and I’m convinced that most people spend more when using a credit card than they would if they had to live on a cash only budget (with no wiggle-room for going over).  I am very open to the idea that I am wrong, and I know that many of my personal finance blogging brothers and sisters love their credit cards, but I’m just not going to use them.  (Not to belabor the point, but let me say this.  With credit cards, I was in debt, I was paying interest, I lived month-to-month, and I was fiscally irresponsible.  Without them, I’m debt free, I’m funding 5 retirement accounts, 3 education savings accounts, and I have six months’ worth of expenses saved in the bank.  I think I’ll stick with what’s working for me.)

If, however, you must use a credit card, please, pay if off in full at the end of each month.  Credit card interest rates can be very high and credit card companies are constantly looking for ways to improve their bottom lines.  Be careful.  Make your payments on time, always open notice letters from your creditors, and keep tabs on your interest rates.  Credit card companies are constantly changing their policies and procedures!

If you click any of the links in this article, you will be directed to other articles about how I got out of debt and how I live debt free.

Click here to view all of the articles in the Top 10 Ways To Save Money series.  Rock on.

8 thoughts on “Top 10 Ways To Save Money – Number 3 – Avoid Paying Credit Card Interest

  1. Great post! You are right on target. My guess is that many people lack the self-discipline to use their credit cards responsibly. Hence, any rewards they may be getting are wiped out by the financial fees they end up paying.

  2. It’s nice to see that there is at least one other person who believes in the way that works best for them, yet doesn’t feel the need to force that belief on others. There are so many people who post on either their own blog or comment on others’ sites criticizing people who do not see things the way they do. I certainly applaud your openness toward other people’s practices, even though you might not necessarily agree.

    I do take issue with one point–you cannot be wrong in your views. Although they may differ from my own views on credit (and as you say, some other peoples’ views), it is simply a personal preference and anyone who does claim that you are wrong just has no ability to understand that not eveyone will see things the way that they do.

  3. NCN:

    I simply love your blog because you “get it”

    You and I don’t buy into the hype regarding credit cards and borrowing money.

    I enjoyed this post because it is exactly what I think and you are correct, there are numerous others who think credit cards are acceptable.

    that they are acceptable if you “DON’T PAY INTEREST”

    Here is the small problem. Even if you don’t pay interest, you HAVE interest. You have interest in the terms of the card, the default remedies, the risk of not paying or having a payment mishandled. Even if you pay the card off at the end of the month, you still have to pay attention to paying ot off at the end of the month.

    I have never understood this line of thinking. If you have the money, pay cash. If you are planning on paying it off at the end of the month, why not wait until the end of the month and then pay cash.

    I, like you, understand that using a credt card is borrowing money. Even if you pay it off before interest accrues, you are still borrowing money, and I am not into that.

    Great article, and even better reasoning.

    Keep going.

  4. Maybe I am a rare bird but I’ve had a credit card for the convenience (very expensive items, online purchases etc.), always paid off the balance in full and never overspent on it. Conscious of what I had going out and coming in. Kept only a single card for everything. Never paid a penny in interest on it in my life. I find it strange that if some people are given a credit card they will just buy whatever with it.

  5. The only debt I have right now are my student loans, and that isn’t even that much. That’s the first thing I’m going to get rid of upon graduation, but until then I’m just trying to limit any other kinds of debt while going to school full time. That makes me very frugal.

  6. Just wanted to say that, here in France, most people do not have credit card.

    Here, what we name “credit cards” or “blue cards” are, BTW, just payment cards. If you do not have the money on your account, you cannot pay with it.

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