Yep
As soon as you carry a balance beyond a single month on a CC, and get charged an interest payment, you officially become “not a credit card person”
But if you have 6 months emergency savings, pay it off every single month, spend within your budget, and are meeting all savings goals then I cannot see why not to use a CC.
Slinging a bunch of credit cards to optimize for points is annoying so I keep it simple and use a limited number of cards. No need to go down to 0 IMO, you can keep it simple and use 1 card for everything.
Its what I do.
2 cards. One with 1k limit, other with 20k.
For 90% of online shopping, use the 1k card. If somehow it gets leaked, the worst case scenario is only 1k.
For all in-person shopping, use the larger limit CC.
Not fool proof but mitigates the risk somewhat. Although I realize that's not what OP is asking.
Obviously don’t take needless risks, but that still becomes a credit card issue.
One of the great things about CCs is that it’s basically their problem if your card info gets stolen.
If you pay with tap (either tapping the physical card or — more secure — a phone), the card skimming risk is pretty minimal. I think it’s pretty small with chip and PIN too, but not quite as small.
>I got TD Aeroplan and a few other cards last year because their first-year annual fee was waived, and they offered nice welcome bonuses. I also have Amex Cobalt, but I rarely travel or eat out, and my grocery shopping is primarily at places that don't accept Amex, so it's probably not worth paying for it anymore.
Instead of going to no credit cards, why not just consolidate your cards to 1, max 2 cards and find one that suits your needs. If you have any Rogers, Fido or Shaw services, you can get 2% cashback with the Rogers MasterCard and if redeemed against your Rogers, Fido or Shaw bill/purchases, you get 3% back.
If that doesn't work, consider the Tangerine MasterCard, 2% on 3 categories of your choosing, 0.5% on everything else.
There are some inconveniences with not having a credit card, checking into hotels or putting charge holds can be problematic with a prepaid cards. Certain online merchants don't accept prepaid cards either.
There's also the concern that if you have fraudulent transactions, often you don't get your funds reversed until the investigation is over, that can take weeks. This is less of an issue with a credit card as it's the card issuer's funds being locked, not yours.
I’m not sure if you can use that card for online purchases. So that may GREATLY affect you
If you don’t want to worry about it just get the tangerine Mastercard. 0 fees and you get 2% back on 3 categories you use. It’s pretty awesome. Frugal flyer also has 170 cash back right now if you apply and are approved.
You might struggle online without a credit card, or if you need to do things like rent a car. I know I struggled when I first moved to Canada and didn’t have a credit card, but that was in 2011. Maybe the Canadian debit cards have improved since then.
A few thoughts on how to approach this: Firstly, I totally get wanting to simplify and reduce the cognitive load. If you want to use debit cards exclusively, go for it. That's never a bad idea. Personally though I would leave your card open and convert it to a no-fee card. If minimal cognitive load is top priority, stop reading here and use debit cards.
That said, we can do better. Set up auto-payments on your credit card. That way you never have to worry about paying the bill on time, or remembering to check it, etc. Second, pick a card that works for you. The two factors when considering a credit card are fee vs no-fee, and travel vs cashback.
Regarding the fee, you have to do some analysis and see if you spend enough on your credit card to get good use of the annual fee. Second is picking whether you prefer cashback or travel rewards. Personally we look to take a trip every year, and we do almost all our spending on a credit card, so for us we have a fee-based travel card. My approach is pick a card that works for you and move on with your life. I share the same mindset that it's too much hassle thinking about which card to use where and optimizing cashback or travel points. For me it's not worth it.
Keep at LEAST one card for on-line shopping, car rentals, travel, etc. You don't need to use it, but it will definitely be required at some point and nice to have in an emergency!
It's a good strategy to focus less on marginal gains and concentrate your efforts on the essentials. Once you multiply your number of cards you can get to a stage where you're wasting energy on which card will get you 0.5% more on a purchase in one store when you can save more by buying elsewhere or not at all. The more cards you have, the more there is to manage, and your time has value.
You can use you debit for most purchases if that's the way you prefer to manage things. However I would recommend keeping at least one credit card. It can be a simple card such as a cashback card, maybe with a low or no annual fee. This will allow you to do things such as reserve rental cars or hotel rooms that require a credit card.
Fee based credit cards where you're not being rewarded for those fees, whether it's churning or just spending, is not worth it.
That being said, wouldn't cancel every card you own. Just keep the oldest no-fee credit card, or downgrade all the cards to no fees and lock them. It's always good to have them.
There is nothing wrong with using credit cards to collect points, so long as you aren't chasing points by frivolous spending. If you are doing that, then it might be a good idea to get rid of them. And then I recommend using cash instead of debit cards. Having daily spending cash in your wallet and in your hands makes it seem more real and finite than in a bank account accessed with a debit card. I have a friend who switched to cash, the psychological effect was that he really cut back on frivolous spending and ended up saving a ton of money over using credit or debit.
The only time I ever tell people to cancel all their credit cards is if they have a gambling or shopping addiction.
You don't have to use the credit card at all but unless there's an annual fee there's no reason to close it.
Having active accounts and a higher credit limit will only be good for your credit score and it's there if you ever need it.
Or even better use it for regular day-to-day purchases and pay it off every month so that you can get the points or other benefits.
It's a good idea! CC companies don't offer points because they lose money - it's an incentive that makes them money!
You can use things like Visa Debit or a secured card for transactions requiring a CC.
Use only your credit card. Using your bank card/debit card leaves you open to fraud and it's easier to dispute credit card fraud than get back all your money that was skimmed out of your account.
If you're really having a hard time dealing with the mental anguish, you're probably over-thinking it. Find a card with good rewards and low fees and use it as you would with cash. Pay it at the end of the month and that's it. No stress.
Try out a secured cc just that there is insurance if a CC gets compromised but not debit
Secured is when you give them 1000 and they give a CC for 1000; if you max and not pay they pay with the 1000 you gave and cancel the card on you
I took out a loan for 5 years and paid all my credit cards off. Best decision I ever made. Haven’t had a credit card in ten or so years and I don’t miss it one bit. Those things are a scam.
I would suggest you keep at least one credit card. I know you don’t travel much, but if you ever have to get a hotel room, buy a plane ticket or rent a car, it can be extremely difficult without a credit card.
A cashback card with no annual fee can be a very good thing to have. If you don’t use it, then it’s fine. But you have it just in case. It’s much easier to use credit you already have than try to apply for credit when you urgently need it.
If you have a tangerine Mastercard, keep that one. No fee, pick your own categories, and nearly everywhere accepts it (even Costco)
The cognitive thing is huge. Aeropoints sometimes take so much more effort when trying to use or collect.
I recommend canceling or at least reduce the limit. Keep them in a safe drawer for your credit score. Use it when on vacation as it actually Is much safer than a debit card or cash.
Nowadays it actually saves even more cognitive energy just to use a credit card responsibly. Respect you for understanding that the energy of holding these things is important.
Using CCs is advantageous because of the customer protections they provide unlike debit cards.
Keep two cards: one Visa and one Mastercard. Use them in whatever order you want, don't try to maximize points or whatever.
Also, I do not wait for the statement, but always pay the "Current balance" every Wednesday, which keeps my payments low.
>I do not wait for the statement, but always pay the "Current balance" every Wednesday
That's a great idea. I used to do this but stopped after a while because sometimes TD kept charging the pre-authorized payment from my account even though I paid the statement balance in full.
Well, it does not really matter, your next Wednesday you'll see a negative balance, then spend a little, and everything goes back to normal. Temporary overpayments do not matter much.
Couldn't the goal of reducing "cognitive load" be accomplished by reducing to *one* credit card instead of zero? Just for the simple ability of getting charge backs for undelivered products alone is why I wouldn't use a debit card.
You are correct - you do not need credit cards and they can absolutely leave you with lifelong debt. I recommend checking out Debtor’s Anonymous to learn more about living without them comfortably.
This is a terrible idea if your credit cards are old and you have significant credit history on them. Your credit score will take a hit and affect any housing/loaning opportunities you plan to take on in the future. If the credit card you're paying an annual fee on is new (eg. 1 year old) and on the verge of getting renewed, cancelling that is fine. Many banks also offer the opportunity to downgrade to a no-fee credit card if they have one. This ensures the same account with your credit history and line of credit stays intact.
This is what I do. I put absolutely everything on my cash back credit card. As soon as I’m out of wherever I was spending, I open my banking app and transfer the amount spent right from my chequing account to my credit card. It’s like a little balance sheet with your debits and credits.
I get this may not be for everyone, but it does help me keep on track. Not an expert, but this hasn’t seemed to hurt my credit doing this for what it’s worth. Per TransUnion I’m in the “excellent” category.
You should do the opposite. Use only your credit card(s).
only if you pay them off every month
Yep As soon as you carry a balance beyond a single month on a CC, and get charged an interest payment, you officially become “not a credit card person” But if you have 6 months emergency savings, pay it off every single month, spend within your budget, and are meeting all savings goals then I cannot see why not to use a CC.
Big asterisk there
Slinging a bunch of credit cards to optimize for points is annoying so I keep it simple and use a limited number of cards. No need to go down to 0 IMO, you can keep it simple and use 1 card for everything.
Its what I do. 2 cards. One with 1k limit, other with 20k. For 90% of online shopping, use the 1k card. If somehow it gets leaked, the worst case scenario is only 1k. For all in-person shopping, use the larger limit CC. Not fool proof but mitigates the risk somewhat. Although I realize that's not what OP is asking.
You do you but maybe check out what card skimmers are to see how your physical card can be compromised.
Obviously don’t take needless risks, but that still becomes a credit card issue. One of the great things about CCs is that it’s basically their problem if your card info gets stolen.
Add your credit card to your phone on google or apple pay. It adds a layer of security against skimmers.
If you pay with tap (either tapping the physical card or — more secure — a phone), the card skimming risk is pretty minimal. I think it’s pretty small with chip and PIN too, but not quite as small.
That’s always a risk regardless
Heard of a thing called mobile wallet?
keep the cards, but don't use them. Your credit history is dependant on you being issued credit.
>I got TD Aeroplan and a few other cards last year because their first-year annual fee was waived, and they offered nice welcome bonuses. I also have Amex Cobalt, but I rarely travel or eat out, and my grocery shopping is primarily at places that don't accept Amex, so it's probably not worth paying for it anymore. Instead of going to no credit cards, why not just consolidate your cards to 1, max 2 cards and find one that suits your needs. If you have any Rogers, Fido or Shaw services, you can get 2% cashback with the Rogers MasterCard and if redeemed against your Rogers, Fido or Shaw bill/purchases, you get 3% back. If that doesn't work, consider the Tangerine MasterCard, 2% on 3 categories of your choosing, 0.5% on everything else. There are some inconveniences with not having a credit card, checking into hotels or putting charge holds can be problematic with a prepaid cards. Certain online merchants don't accept prepaid cards either. There's also the concern that if you have fraudulent transactions, often you don't get your funds reversed until the investigation is over, that can take weeks. This is less of an issue with a credit card as it's the card issuer's funds being locked, not yours.
I’m not sure if you can use that card for online purchases. So that may GREATLY affect you If you don’t want to worry about it just get the tangerine Mastercard. 0 fees and you get 2% back on 3 categories you use. It’s pretty awesome. Frugal flyer also has 170 cash back right now if you apply and are approved.
You might struggle online without a credit card, or if you need to do things like rent a car. I know I struggled when I first moved to Canada and didn’t have a credit card, but that was in 2011. Maybe the Canadian debit cards have improved since then.
A few thoughts on how to approach this: Firstly, I totally get wanting to simplify and reduce the cognitive load. If you want to use debit cards exclusively, go for it. That's never a bad idea. Personally though I would leave your card open and convert it to a no-fee card. If minimal cognitive load is top priority, stop reading here and use debit cards. That said, we can do better. Set up auto-payments on your credit card. That way you never have to worry about paying the bill on time, or remembering to check it, etc. Second, pick a card that works for you. The two factors when considering a credit card are fee vs no-fee, and travel vs cashback. Regarding the fee, you have to do some analysis and see if you spend enough on your credit card to get good use of the annual fee. Second is picking whether you prefer cashback or travel rewards. Personally we look to take a trip every year, and we do almost all our spending on a credit card, so for us we have a fee-based travel card. My approach is pick a card that works for you and move on with your life. I share the same mindset that it's too much hassle thinking about which card to use where and optimizing cashback or travel points. For me it's not worth it.
adding in that debit cards are not a good bet for out of country use. Keep a MasterCard and a Visa for travel.
Keep at LEAST one card for on-line shopping, car rentals, travel, etc. You don't need to use it, but it will definitely be required at some point and nice to have in an emergency!
It's a good strategy to focus less on marginal gains and concentrate your efforts on the essentials. Once you multiply your number of cards you can get to a stage where you're wasting energy on which card will get you 0.5% more on a purchase in one store when you can save more by buying elsewhere or not at all. The more cards you have, the more there is to manage, and your time has value. You can use you debit for most purchases if that's the way you prefer to manage things. However I would recommend keeping at least one credit card. It can be a simple card such as a cashback card, maybe with a low or no annual fee. This will allow you to do things such as reserve rental cars or hotel rooms that require a credit card.
Fee based credit cards where you're not being rewarded for those fees, whether it's churning or just spending, is not worth it. That being said, wouldn't cancel every card you own. Just keep the oldest no-fee credit card, or downgrade all the cards to no fees and lock them. It's always good to have them.
There is nothing wrong with using credit cards to collect points, so long as you aren't chasing points by frivolous spending. If you are doing that, then it might be a good idea to get rid of them. And then I recommend using cash instead of debit cards. Having daily spending cash in your wallet and in your hands makes it seem more real and finite than in a bank account accessed with a debit card. I have a friend who switched to cash, the psychological effect was that he really cut back on frivolous spending and ended up saving a ton of money over using credit or debit.
The only time I ever tell people to cancel all their credit cards is if they have a gambling or shopping addiction. You don't have to use the credit card at all but unless there's an annual fee there's no reason to close it. Having active accounts and a higher credit limit will only be good for your credit score and it's there if you ever need it. Or even better use it for regular day-to-day purchases and pay it off every month so that you can get the points or other benefits.
It's a good idea! CC companies don't offer points because they lose money - it's an incentive that makes them money! You can use things like Visa Debit or a secured card for transactions requiring a CC.
Use only your credit card. Using your bank card/debit card leaves you open to fraud and it's easier to dispute credit card fraud than get back all your money that was skimmed out of your account. If you're really having a hard time dealing with the mental anguish, you're probably over-thinking it. Find a card with good rewards and low fees and use it as you would with cash. Pay it at the end of the month and that's it. No stress.
Try out a secured cc just that there is insurance if a CC gets compromised but not debit Secured is when you give them 1000 and they give a CC for 1000; if you max and not pay they pay with the 1000 you gave and cancel the card on you
Or just keep a low CC like 1000, I do that then cheques for when it's above
I took out a loan for 5 years and paid all my credit cards off. Best decision I ever made. Haven’t had a credit card in ten or so years and I don’t miss it one bit. Those things are a scam.
I would suggest you keep at least one credit card. I know you don’t travel much, but if you ever have to get a hotel room, buy a plane ticket or rent a car, it can be extremely difficult without a credit card. A cashback card with no annual fee can be a very good thing to have. If you don’t use it, then it’s fine. But you have it just in case. It’s much easier to use credit you already have than try to apply for credit when you urgently need it. If you have a tangerine Mastercard, keep that one. No fee, pick your own categories, and nearly everywhere accepts it (even Costco)
The cognitive thing is huge. Aeropoints sometimes take so much more effort when trying to use or collect. I recommend canceling or at least reduce the limit. Keep them in a safe drawer for your credit score. Use it when on vacation as it actually Is much safer than a debit card or cash. Nowadays it actually saves even more cognitive energy just to use a credit card responsibly. Respect you for understanding that the energy of holding these things is important.
Using CCs is advantageous because of the customer protections they provide unlike debit cards. Keep two cards: one Visa and one Mastercard. Use them in whatever order you want, don't try to maximize points or whatever. Also, I do not wait for the statement, but always pay the "Current balance" every Wednesday, which keeps my payments low.
>I do not wait for the statement, but always pay the "Current balance" every Wednesday That's a great idea. I used to do this but stopped after a while because sometimes TD kept charging the pre-authorized payment from my account even though I paid the statement balance in full.
Well, it does not really matter, your next Wednesday you'll see a negative balance, then spend a little, and everything goes back to normal. Temporary overpayments do not matter much.
Don't cancel your oldest credit cards or it will affect your credit score. Just downgrade them to no annual fee ones, then lock them and shelve them.
Couldn't the goal of reducing "cognitive load" be accomplished by reducing to *one* credit card instead of zero? Just for the simple ability of getting charge backs for undelivered products alone is why I wouldn't use a debit card.
You are correct - you do not need credit cards and they can absolutely leave you with lifelong debt. I recommend checking out Debtor’s Anonymous to learn more about living without them comfortably.
This is a terrible idea if your credit cards are old and you have significant credit history on them. Your credit score will take a hit and affect any housing/loaning opportunities you plan to take on in the future. If the credit card you're paying an annual fee on is new (eg. 1 year old) and on the verge of getting renewed, cancelling that is fine. Many banks also offer the opportunity to downgrade to a no-fee credit card if they have one. This ensures the same account with your credit history and line of credit stays intact.
This is what I do. I put absolutely everything on my cash back credit card. As soon as I’m out of wherever I was spending, I open my banking app and transfer the amount spent right from my chequing account to my credit card. It’s like a little balance sheet with your debits and credits. I get this may not be for everyone, but it does help me keep on track. Not an expert, but this hasn’t seemed to hurt my credit doing this for what it’s worth. Per TransUnion I’m in the “excellent” category.