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A reader asks:

In today’s world, you can’t get by without credits cards right? Can you actually live without using credit?

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There’s actually two questions here. Can you get by without using credit? The short answer to that is yes with the possible exception of a mortgage. I’ll concentrate on the credit card fallacy for the rest of this answer.

The credit card companies are MASTERS at perpetuating the myth that 1) credit cards are necessary, and 2) they are good.  Neither is true.

Credit cards are a PRODUCT, a very lucrative product. Never forget that, and never forget that credit card companies are in business for ONE THING only: to take your money. They do not offer you credit because they like you, because they want you to succeed or do well in life. They are in it FOR PROFIT, and there’s nothing wrong with that, but you need to be clear about that fact.

Here’s a few busted myths:

You must have a credit card to do business

There was a time when bank or debit cards were not accepted in some places that credit cards were. Those days are virtually over and, as far as I know, may be dead already. I have been using a Visa bankcard for several years and not one time has it been declined anywhere, for any reason.

Teenagers need credit cards to learn financial responsibility

That’s just a crock of doggie doo that the debt industry has perpetuated. Teenagers need to first be taught to be responsible with cold hard cash, then a bank account, and a debit card. Teenagers not only do not need credit, you are setting a dangerous precedent and lifestyle choice if you allow them to get used to it at such a young age.

Teenagers are the new target market for the credit industry. Teenagers supposedly feel more like adults when they use credit cards. There may be some truth to that on the surface, but again don’t use credit cards. Teach them to use a bank card that is deducting money from their bank account every time they make a purchase. Teach them real financial responsibility, not debt-laden lifestyle enhancement.

You must have a credit card for a safety net

No, you don’t. Save up an emergency cash fund to use as a safety net. You will be surprised how many fewer "emergencies" you actually have if you’re spending cold hard cash instead of running up the credit card.

Use credit cards to get cashback bonuses and airline miles

Again, we go back to the principle that any time some sort of reward is offered, or benefits featured, the company offering the debt product is not doing it to be nice. Always follow the money. No matter what kind of rewards – bonuses, airline miles or whatever is offered- you can bet your behind that company still knows they are going to make a lot of money from their debt product.[TIPJAR]

Credit card companies realize that most people never use their airline miles or credit card rewards.Even when they do, the credit card companies have arranged these reward offerings in such a way that the cost to them and benefit to you is nowhere near what it has cost you to secure those benefits by using the credit card. Don’t use a credit card, use cash. Then take the interest you are saving and invest it to get REAL rewards.

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You do not need credit cards, period. In fact, there’s no real reason for anyone to use them other than to purchase lifestyle they cannot afford.

There are NO disadvantages in avoiding credit cards, and all sorts of benefits – like staying out of debt!  Find out more in my book, Life Without Debt.

What are your questions about debt and credit cards?