I Finally Quit Using My Credit Card for Everything, and I'm Not Looking Back

There are legitimate reasons to use credit cards. If you're building credit, for example, using a credit card can be a great way to show lenders you're responsible with money and can pay your bills on time.

Many people also use credit cards to earn rewards, like cash back or airline miles. While that's not a terrible idea, I don't think it's the best way to manage my money. After years of using my credit card to earn cash back rewards, I'm scaling back.

Here's why I'm ditching the plastic.

Budgeting is easier with cash

For many years, I paid my credit card bills on time, earning the cash back rewards for purchases while avoiding paying interest. In general, it was a pretty good system. At the end of the year, I'd have a few hundred dollars of earned cash rewards that I'd use on Christmas shopping. What's not to love about that, right?

But then, a few unexpected bills popped up, and I forgot about a few expenses I'd put on the card. After avoiding looking at the total balance for a bit (not recommended), I had more than $7,700 in credit card debt. Yikes.

I worked my tail off on a few side projects recently and was fortunate enough to pay off my debt fairly quickly. Since then, my relationship with credit cards has changed.

I manage my money far better with a budgeting app and rely (mostly) on my checking and savings accounts. The money I have is the money I have -- no more, no less.

I don't mind giving up the points and perks

What's tempting about credit card perks (whether airline miles, cash back, or free hotel stays) is that the benefits don't always outweigh the high annual percentage rates (APRs). When I used my credit card for most purchases, I earned about $300 in cash back annually. It was a nice perk, but my short time of letting my debt accumulate offset some of the gains.

The average credit card APR is 24.7%, and the average American household has $7,951 in credit card debt. Many people likely signed up for their cards for the perks, just like I did, but now they're having a hard time paying off their debt.

Don't get me wrong, I still use my credit card occasionally. But it's far more intentional than before. If I have a large expense, like special activities or classes for my kids, then I might put it on the card. But I don't use it without taking a close look at my checking and savings accounts first. And I don't miss the cash back because it wasn't part of my monthly budget anyway.

If you're using a credit card to earn cash rewards or travel points, that's great. Or if you keep up with the monthly balance like I did for years, then fantastic. But the latest data shows that credit card delinquencies are rising and have surpassed pre-pandemic levels.

This means many of us may want to start rethinking our relationship with credit cards -- perks or no perks.