There are so many reasons why people have stopped their credit cards or forgo credit cards totally.
Risk of Debt. When used as a method of payment, credit cards deliver convenience, security, a record of your spending, and potentially valuable rewards (i.e. how to use a credit card and rewards wisely). When used as a method of finance, however, credit card usage can be disastrous. Cardholders may initially find that they can charge large expenditures to their accounts, only paying a small monthly payment. As new purchases and interest charges continue to add to their balance, they quickly find themselves unable to pay their minimum balance. Whether they have achieved the difficult goal of paying off their credit card debt, or have undergone a painful bankruptcy process, many people treat credit cards like addictive substances, and avoid them entirely.
- Increased Interest Rates. Cardholders should maintain control of their debt and if possible, pay off the balance of their credit cards every month. However, many cardholders cannot pay off balances every month, and interest payments quickly accrue. If cardholders make late payments or go over their spending limit, they may be subject to increased interest rates in addition to other fees or penalties.
- New Alternatives to Credit. Debit cards and other new financial instruments that eliminate the risk of debt continue to flood the credit card market. Stored value cards, offered by many banks, offer many of the conveniences of debit cards.
- Credit Card Fatigue. Some cardholders become frustrated with their credit cards. Many people pay exorbitant late fees and penalties, or become victims of credit card fraud. Some families find that keeping track of their charges, and paying each credit card bill, is just too time consuming. Other ex-cardholders complain of negative experiences with their bank’s customer service department.
- Reduced Access to Credit. Some customers have less access to credit. They may have defaulted on home loans, been laid off, or experienced other financial difficulties. This can result in no longer qualifying for new credit cards.
- Lower Expectation of Credit. Many people who have experienced financial difficulties assume they cannot receive a new card. Their uncertainty, combined with their newfound aversion to risk, may cause them to ignore the possibility of obtaining a new card, even if they might qualify.
- Budgetary Simplicity. Some people prefer to pay for purchases with cash or debit cards. This helps to eliminate the risk of debt and simplifies budgeting. In addition, using cash instead of credit cards allows people to stay on budget.
- Foreign Transaction Fees. International travelers may find that many credit cards charge fees for using credit cards outside the home country.
- Reduced Risk of Identity Theft. People who do not have credit cards may have a reduced risk of identity theft.