Often times people who have used credit cards as a part of their financial tools have a hard time parting with them.  They’ve become dependent on them, to a degree, as a perceived measure of “security.”  (Security in the sense of feeling safe, not the type of investment in securities.)

But credit cards do not mean security.

How do I know that?  Simple:

Debt  =  Risk, and
Credit Cards  =  Debt

Credit Cards  =  Risk

(and that’s not a non-sequitur)

Debt is not security, and it’s not an asset.  It’s risk – a liability.  Credit cards are debt, so using them increases the risk level in your life.

When you calculate someone’s personal net worth, you look at their assets – the things they own – and their liabilities – what they owe.  Debt of any kind (including credit cards) are liabilities.

Sure, credit cards can help you in a pinch, but if the personal crisis is large enough, they will run out and take you down too. If you have a car breakdown and don’t have the money to fix it, a credit card can help you float that.  But if you have a larger problem like a job loss, a credit card compounds the problem.

See, nothing is made more “secure” because it has debt or debt options.  Your home, for example, is not more secure if you have a home equity line of credit (HELOC) available to you.  A HELOC allows you to borrow money from the equity in your home.  The HELOC actually makes the home less secure by exposing it to additional debt!

You want security?  Rid yourself of debt.  Owe nothing to anyone.  Save a pile of cash.  Then enjoy a measure of real financial security.