Why I Stopped Using My Cash Back Credit Cards

When I turned 18, my mom let me know that I’d reached an important part of my financial life — I could get my very own credit card. I had always seen how much trouble people would get themselves into with credit card debt, so I was afraid of getting one in the first place. My parents, who’ve always been very responsible with money, shut this thought down almost immediately. They reassured me that if I treated my credit card like a debit card (meaning that I should never spend more than I have sitting in my bank account), I would be fine.

Reluctantly, I applied for the credit card, and got it in the mail within the week. After a few months of not being irresponsible (yay) with my standard US Bank credit card, my bank decided to reward me with a cash back version of the card I already had. Seeing how I wasn’t getting any rewards with my current card, I decided to go for it. My thought was, Why not? This piece of plastic is just an upgrade from my current piece of plastic.

Back when I first got these credit cards, I was at the age when I didn’t even try to budget (yikes). I just knew that if I tried to spend less than I made, I’d be fine. What I didn’t account for was that I could still potentially be spending money on things I didn’t really need. Seeing how I only worked a minimum wage job at a water park, you can see how this was not good.

Here’s where the problem really started, though: I thought that I was spending money on things I needed, AND I thought I was getting paid to get those things. My dangerous thinking ended up leading me to apply for another cash back card, because I thought it would be a great idea to boost my credit score while getting even more credit card rewards.

Currently, at the age of 20, I now have three credit cards: that original US Bank Platinum card, the US Bank Cash+, and the Discover It card. You know what else I have because of those three pieces of plastic? Stuff I don’t need, as well as cold, hard cash missing from my bank account.

I’m a mathematician — let me crunch some numbers for you. Here’s the deal: the absolute best cash back rewards offered currently is up to 5% on select categories. This means that even if you only bought things in those categories (which let’s be real, you’re not going to shop only at the weird stores and places they pick all of the time), you would have to spend $2,000 to get $100. You still spent $1,900 you didn’t need to.

Think what you could do with $1,900. That’s mortgage or rent. That could be tuition money, or money you could invest.

I’ve recently embarked on a journey to stop using my credit cards altogether. After reading Rachel Cruze’s book Love Your Life, Not Theirs, I decided that I was going to stick to using only cash and my debit card to pay for things. What I am now realizing is that the credit card marketers have gotten so far into my head that $2 in cash back sounds better than not worrying about paying another bill for some reason.

After doing some research, I found that the reason I feel the need to swipe a piece of plastic is because of instant gratification. Even just the phrase “cash back” makes us think we are getting something from nothing almost immediately. Even though I have numbers to prove why using these credit cards is a bad idea, my mind is stuck on the fear that I’m missing out on free money — the worst kind of FOMO. But you know what I’m missing out on when I’m using those cards? Not panicking about whether or not I remembered to pay a bill, not cluttering up my small apartment with things I really need, or having some extra cash.

Take a good look at your wallet, and ask yourself if your credit cards are tricking you into spending money you don’t really need to spend. If they are tricking you into spending money you don’t even have, I’d say cut those bad boys up and rethink your spending habits immediately…but that’s just me. Either way, I’d challenge anyone to stick to cash and a debit card for a while to evaluate your relationship with credit cards. Everyone is different, so you may discover that have a perfectly healthy relationship with you credit card. But I’m hoping this challenge will enlighten someone in regards to how things could be better, the way it enlightened me.

Don’t let the credit card companies’ clever marketers trick you into going into debt. You got this!

Hattie is currently working towards her undergraduate degree in Mathematics at Colorado State University. See more of her writing on her blog, Modern Math

Image via Unsplash

  • Rebecca Ann

    I feel like a better way to use these cash back cards is to pay for things you do actually NEED. Like, pay your bills with it, and you get money back for something you were already going to spend, anyway, rather than those random offers.

    • Hayley Jennings

      Agreed! I only use my credit card for groceries, toiletries, and other necessary purchases. I use my debit card and cash for everything else. It keeps my credit card bill relatively low, and then I get regular cash back because these are purchases I make several times a month. Win-win.

    • Lyla

      Exactly! The way she was looking at cash back credit cards is totally in the wrong mind set; which I suppose is the point of the article. I currently use my 1 credit card for all my bills and purchases and have almost $300 in travel miles accumulated after less than a year. Sure, percentage wise I had to spend a lot to get back that $300 but it wasn’t mindless spending it was my normal day-to-day spending and I just happened to get money back in return for using their card.

    • Keisha

      Oh yeah, and this is also so dependent on an individual’s cash flow anyway. I spend more than $1900 most months on things that I HAVE to pay for whether or not it’s with a credit card or debit card. Things like utilities, insurance, and news/Netflix subscriptions all get auto-payed on my credit card. Add to that grocery bills and booking accommodations and flights for work conferences (which I later get reimbursed for). Voila, I net about $100 each month on things I had to pay for anyway.

      However, I remember when I was a college student my monthly expenses were wayyyyyy lower than that and my cash flow was generally dismal. It probably wouldn’t feel that worth it to me at that time in my life to have a cash back card, because basically 1% of just about nothing is even smaller than just about nothing hahaha. It would have taken ages to work up to a nice cash reward. I’d have been more tempted to use it inappropriately too back then. There is a right way and a wrong way to utilize these cards for sure!

    • Ian Abraham

      I’ll continue to be responsible and make $400 dollars a year for buying/paying for things I won’t regret later. Like food, gas and bills. If it makes sense, I’ll buy it. Only stupid people complain about ruining a good opportunity. Take responsibility for your actions because a credit card will only help you. It will help you build credit and gives you purchasing power. It’s a tool and the user is in control. It’s set up to try not to get a person into debt. That’s why there’s a limit. But if someone goes out and qualifies for 5 credit cards and then goes and maxes them out now they’re 5 times over what they should have spent. It’s not the credit cards fault… Ever.

  • Kira90

    My card has a much higher cash back for cafes/restaurants. And for the first couple of months I kind of used it to justify take out coffee… not anymore, but that’s something people should take into account: higher cash back categories are not “guilt-free”

  • penguin

    I’m the complete opposite (I freely use credit cards without fear, and always pay off in full), but the article does a good job explaining why it doesn’t work with this writer and her particular mindset. But I’m very glad to hear your parents urged you to get your first credit card anyway! You will be so much better served by that move than the people who are so afraid of credit cards that they end up 35 years old with no credit record at all and struggle to get apartments rented (or loans) because they just have zero history.

  • Shae

    I feel like this is kind of missing exactly the point of what the parents were trying to teach. The idea is that there are certain things you HAVE to spend money on. Groceries, getting the oil changed in your car, taking your dog to the vet, gas to drive to work. So you set aside a certain amount of money to do those things. For example “My budget for groceries this week is $50, so I have $50 set aside for that”, then you use the credit card to make the purchase, and pay off the credit card with the money you set aside. You still spent the exact same amount of money you had to spend anyway, but you also got the benefit of points or cash back or miles or whatever it was. Once you get better and more responsible you can then start to just pay off the credit card at the end of the week instead of after the purchase, then the end of the month, and eventually maybe even an auto-payment.

    I just wish the article didnt paint credit cards as some evil thing and was more honest about the real problem being a self-control issue.

    • androidreally?

      Hopefully her math degree will explain this to her. In our society, we choose a certain amount of continuing monthly expenses, and as long as there isn’t any “convenience” fee for using a credit card, there is an advantage to getting cash back for using it. The most important part is to pay the bill in full each month, because the very first finance charge will wipe out all of the cash back in one fell swoop!

  • Wes

    I suppose if you believe that the only reason you will buy frivolous items is because you have a credit card then maybe you shouldn’t have one. But using a debit card or cash to make purchases on everyday items is such a mistake. Why on Earth would you use a method of payment that gets you nothing in return when instead you can use something that will reward you?

    I really hope people are not taking the advise of this article.

  • Ms. Kiwi @ KiwiAndKeweenaw.com

    I think before you start using cash back credit cards you need to make sure you learn to use them properly. Pay off your balance in full every month and don’t buy things you wouldn’t normally buy. There are lots of great opportunities out there in terms of credit card bonuses. You have to approach them appropriately, which is easier said than done! Good work realizing where you are at!

  • Kelsie

    Unfortunately the nation as a whole isn’t as financially responsible as the TFD comment section, or there wouldn’t be 1 trillion (+) dollars in just consumer credit card debt. This article does shine light on a tool that credit card companies use to lure young adults into credit card debt.

    I do responsibly use a rewards credit card, but I am also aware that I am not going to retire on my cash back rewards. Everything in life always requires balance.

    Staying out of debt is not an irresponsible decision and life will go on with out a credit score:)

    Everyone reading this blog is on the right path! To each their own! Stay fiscally smart everyone!

  • RiantHoff

    Sorry, you are smart enough to use a credit card as a debit card. But not smart enough to not to buy things you don’t need? It can’t be. Either you are smart and use a credit card like a debit card AND buy only what you need. Or you buy things you don’t need AND you use a credit card like a CREDIT card. You can’t be half smart. This article has no sense.

    • Tina Morris

      I’m not sure why you think one cannot use a credit like a debit card AND buy things you don’t need. Most of, if we are honest with ourselves, buy wants in addition to needs. Do I need to go out to eat with coworkers a few times a week? Nope, but that’s how we spend time together outside of work. Did I need a hippopotamus cookie jar or a brownie bites baking tray? Nope, but I will use them, hopefully love them, they were both on clearance and I saved 5% by using my Target card, which I’ve already copied over to my transaction sheet so I know exactly how much I’m paying and out of which paycheck. Now, if I factored that 5% reward into my purchase decision, I would be falling prey to the same mindset that the author warned us that she caught herself in. Judging by debt levels in America and the popularity of these types of cards, I’m sure that she’s not the only one.

  • EternalMyrtle

    I agree with the others: this is bad advice . After reading it, I thought to myself who would give such terrible advice and present it as if it is an undeniable truth? Then I looked at the signature line: “Hattie is currently working towards her undergraduate degree in Mathematics at Colorado State University. See more of her writing on her blog, Modern Math”.

    So, a kid basically wrote this. She doesn’t know anything about adult life. Now, I really can’t fault her for that but I do fault her for pretending to be wise. She’s young, she thinks in black and white. This wouldn’t be the first time a young person thought she knew everything and was more enlightened than the rest of us. It certainly won’t be the last. The only difference these days is that every kid with a computer can write a blog and give out free advice to anyone who will listen. Not only that, they all feel they have to do so to “get ahead”. It’s a messed up that a blog post offering financial advice penned by a kid is making it into my phone news feed but that’s the world we now live in.

    Anyway, here are all the reasons this advice is not sound:

    Many of us have sizeable non-negotiable expenses and bills to pay. Whether we pay with a credit or debit card, they will need to be paid regardless. Credit cards offer a level of protection not offered by debit cards and the cash back is a nice perk. A debit card is inherently less safe due to being linked directly to one’s checking account. In addition, you do not have the same purchase protection with a debit card that many credit cards offer (such as Amex and Discover). If one is responsible and pays the statement balance in full each month, it is essentially the same thing as using a debit card anyway. Plus, as an added bonus, you are building credit.

    The cash reward is a nice perk but you don’t spend extra money each month to get the rewards. For instance, I pay $99 a year for my Amex cash back card which gives me 6% on groceries up to $6000 a year and 3% on gas. I do not drive more and buy extra gas (or eat more) to receive more rewards but it is a nice perk that I am earning money back on purchases I need to make anyway (nice enough that I feel it is worth paying $99 a year for this benefit). The 2% I get with CitiDouble adds up quickly and is almost double what you would earn on a high-yield savings account. Why not earn interest on savings and expenses? It’s a no-brainer. With all my cash back cards, I get about an extra grand in my pocket each year. Basically, you are earning a little cash doing very little work (just staying on top of your accounts and paying them on time).

  • Ashley Dawson

    I completely agree. The credit card companies are not stupid. They know people spend way more than the 2 or 5% cash back they get in “rewards”. I also stopped using credit cards for discretionary or day-to-day spending. I do use credit (Citi Costco visa) for all travel purchases since trip protection/cancellation is a benefit which would normally cost $100-$200 to purchase individually. I also use credit for expensive purchases more than $500 or so with warranty. I also have another card (Delta sky miles) which I don’t spend on but use for the free checked bag benefit, which greatly outweighs the $95 annual fee.