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Personal finance is somewhat of a taboo topic of conversation in the US. It is hardly taught in schools, and then 18-year-olds are expected to make decisions about taking on loads of debt for college when they have no understanding of money.
It is a flawed system that leads to a lot of misunderstanding about all sorts of topics – including credit cards.
The Beauty and Danger of Credit Cards
I have talked to many people of various age groups about my obsession with credit card miles and points. When I was at a Mr. Money Mustache (a blog based around the Financially Independent, Retire Early “FIRE” movement) meeting recently in Salt Lake City, I presented tips on how to maximize credit card points and miles. I was transparent about the number of credit cards I have, and was met with faces of fear, confusion, and the immediate question of “how low is your credit score?!”
I pulled up my credit score and showed the entire room and they were in shock. It’s very easy to have bunches of credit cards and maintain a high credit score.
Another narrative I run into frequently talking with other millennials about credit cards is the impression that “credit cards are bad for you.” When my wife and I started dating, she had no understanding of how credit cards worked and thought the same thing.
So why does my generation feel this way? I believe it’s the lessons we learned from our parents and the way credit card companies have targeted young people.
In the past, credit card companies were targeting young people on college campuses with “lucrative” sign-up bonuses like a free t-shirt. These students easily became buried in credit card debt. Even though those practices have been outlawed, those students are now the parents of Millennials and Generation Z’s, and those generations are being fed unfortunate narratives. Do I blame them for having a negative opinion of credit cards? Not at all. But times have changed and credit cards are WAY more lucrative than a t-shirt, if you use them responsibility.
I explain my obsession with credit cards to the average Joe this way:
Credit cards are like fireworks. If you use them properly, it is a beautiful show. If you use them irresponsibly, they will blow up in your face.
I personally have been able to use credit card rewards to save thousands of dollars and earn millions of points and miles to be able to travel more. Have I paid some interest when I’ve been in a financial bind early in my career? Sure. But in the end, I’m WAY ahead.
But still, personal finance moguls like Dave Ramsey love talking about how credit cards are a bad idea. And I don’t disagree, to an extent. He even came out with a documentary called Maxed Out, which explains about how credit cards can be malicious.
Americans on a general scale have very poor financial literacy and have trouble controlling spending. But you can make financial tools like credit cards work for you, and not against you. And they can unlock all sorts of travel experiences you might not have otherwise had.
What are your thoughts on credit cards when it comes to personal finance? Let’s hear them in the comments!
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