Warren Buffett Hates Credit Cards: Here’s How To Realistically Ditch Yours
Written by
Nicole Spector
Edited by
Molly Sullivan
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Credit cards are, by nature, both an asset and a liability. On one hand, they enable you to build a credit score, nab rewards (ideally) and get fraud protection. On the other hand, they promote spending money you don’t actually have and can easily become your worst nightmare, in the sense of financial burdens and obstacles.
It’s clear that things have gotten rather out of control with credit card spending.
Americans’ total credit card balance is $1.129 trillion in the fourth quarter of 2023, according to the latest consumer debt data from the Federal Reserve Bank of New York, up from a record $1.079 trillion in the previous quarter, and resulting in the highest balance since the New York Fed began keeping track in 1999.
Because they pave the way for high-interest debt accumulation, investing mogul and billionaire Warren Buffett is generally against credit cards and advocates for spending in cash as much as possible.
It’s a great idea, isn’t it? Just bid adieu to credit cards and start fresh with a more cash-centric approach. Alas, with our society’s mass devotion to and dependence on credit cards, ditching credit cards altogether can seem impossible. But there are ways to realistically move away from them.
Create a Budget
You may be tired of hearing about how important it is to create a budget, but this point cannot be overstated and can help you ditch or at least scale back on credit card usage.
“Creating a budget helps you figure out how much you can spend and where your money should go each month,” said True Tamplin, CEPF, founder of Finance Strategists. “It’s a bit like being the manager of your own financial team — you get to call the shots on where your money plays.”
Opt For Cash or Debit as Often as Possible
It’s admittedly obvious, but the more you embrace cash, the more you’ll be able to resist relying on a credit card. Plus, research shows that opting for cash can be great for keeping within the limits of your budget.
If you’re worried about the safety of cash, feel comfortable using a debit card instead.
“Most debit cards backed by major companies come with the same protections as credit cards,” Tamplin said. “Just keep an eye on your accounts and report anything sketchy right away.”
Use Prepaid Cards
Another way to realistically ditch credit cards is to instead use prepaid cards.
“By using cards such as Mastercard prepaid cards, one is able to experience the same benefits of having a credit card — mainly a physical card that can be used everywhere — and not have to worry about their spending going out of control or taking on lots of debt,” said Sebastian Jania, director at Ontario Property Buyers.
Enroll In a Debt Management Plan/Get Credit Counseling
If the onus of credit card debt is still on your shoulders after ditching — or scaling back — on credit card usage, you may want to look into a debt management plan offered by a nonprofit credit counseling agency.
“While the debt management plan will close included accounts, it will maintain — and in some cases even restore — positive payment history to your creditors,” said Thomas Nitzsche, financial educator at Money Management International.
“On average, a debt management plan lowers interest rates into the single digits and helps consumers increase their credit scores by nearly 100 points over the course of repayment,” Nitzsche said. “Most debt management plans last four years, but can last longer or be paid off sooner, as your financial situation changes.”
If Overspending, Get to the Root of It To Stop It
Look, let’s be real, millions of Americans are steeped in debt because they’re living paycheck to paycheck. But then you have the folks who are spending beyond their means. If this is you, it’s critical to get to the bottom of why you’re stuck in this vicious cycle. Professional help may benefit you.
“If you’re having trouble limiting your credit card spending, it’s best to get to the root of the problem,” said Scott Lieberman of Touchdown Money. “Speak with a professional to uncover the emotional reasons you’re overspending.”
Set a Spending Alert on Your Credit Card App
“If you feel your overspending is due to lack of planning, try setting a spending alert on your credit card app,” Lieberman said. “You can set up warnings for yourself when you reach certain amounts of spending each month.”
Liken Losing Debt to Losing Unwanted Weight in a Healthy Way
Lieberman points out that if you’re trying to lose weight, you probably don’t want delicious cookies and chips within easy reach. Practice this philosophy when resisting credit cards.
“If you’re trying to lose debt, you probably don’t want to be tempted by your credit card,” Lieberman said. “So consider locking it up in a safety deposit box or putting it in a very hard to reach place in your home. This will at least make you think for a few minutes before you use it.”
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