Quiz: Are You a Credit Card Person?
Congrats you are a credit card person!
Congratulations on knowing how to use credit cards to your advantage! It’s great to optimize your finances, build credit, and maybe even enjoy some rewards along the way. Your responsible approach is definitely paying off.
However, it’s important to stay vigilant. The world of credit is dynamic, and small slip-ups can have disproportionate consequences. Remember that overspending, missing payments, or neglecting to monitor your accounts can quickly negate all your hard work. So, continue to manage your credit with the same diligence that got you to this point, ensuring that you stay on top of your finances without letting them tip you off your successful path. Keep up the great work, and keep an eye on the balance!
You are not a credit card person!
It’s okay. Credit cards are not for everyone. Some people should just not have credit cards. If more people took this quiz seriously, then maybe Americans wouldn’t be in 1.29 trillion dollars of credit card debt. (2023 Q4) Ignoring these quiz results and continuing to use credit cards will cost you more than you can afford. Until you educate yourself, it will be very difficult to escape the unsustainable fees and drain on your lifestyle.
When did you last pay interest on one of your credit cards?
If you have paid a cent of interest, then you are not benefiting from credit cards. They are taking advantage of you. To avoid being trapped in an endless debt cycle, discontinue their use immediately. A good rule of thumb is to only use credit cards if you have a zero credit card balance from month to month, a six-month emergency fund, and haven’t accrued any credit card interest in the last 12 months. These rules might seem excessive, but they will hopefully save you from the painful downward debt spiral so many people fall victim to.
The best way to increase your credit score is by carrying a balance and only making minimum payments?
There is a common belief that carrying a balance from month to month builds your credit history or improves your credit score. In truth, carrying a balance only means you are guaranteed to pay interest. Paying your balance in full each month will positively impact your credit score by lowering your total credit borrowed, showing you can manage your credit responsibly.
How do you manage your credit cards?
Paying your credit card balance in full is the only surefire way to maximize rewards and credit health while minimizing any downside. Anyone who can’t follow this simple rule without fail is just simply not a credit card person.
Credit cards come in clutch for an emergency?
This should never be the situation. Before ever using credit cards, you should have a fully funded emergency fund of at least six months of living expenses ($10,000 minimum).
The truth is that life is filled with many hardships, most of which can not be predicted or planned for. So, we need to provide a safety net for our financial well-being by having a large stash of readily available funds.
Redemption: How to Become a Credit Card Person
Accept the fact that you suck at credit cards
The first and probably most painful step is accepting that you are bad at something. Trust me, this step will help you find the right path. Once you admit that there is a problem, you can finally start making the necessary changes to fix it.
Ask yourself are credit cards even right for you?
If you have low impulse control, poor discipline, or addictive tendencies, then credit cards might not be a good fit for you. That is okay. I would wholeheartedly recommend this option to most people. There are ways to safely build your credit without credit cards.
Pay off all your existing credit card debt
If you are already in credit card debt, I would close your credit card accounts. Yes, this will affect your score temporarily, but you know what hurts you worse? Having a bad score due to high utilization, paying lots of money in interest, and missing out on time to start growing your wealth.
Save 6 months of living expenses or $10,000 minimum
If you want to avoid falling prey to interest, Paying your bills every month should not be based on luck. You need to have money sitting on the sidelines that can fill in when problems happen.
Make it 12 months without paying any interest
You need to prove to yourself that you can go a certain period of time without paying interest. Consider this a right of passage to become a savvy credit card user.
Remember the number one rule of being a credit card person
Always pay off your entire balance every month automatically with autopay. This might also mean padding your checking account with thousands of dollars extra so you don't incur overdraft fees.