Love credit cards and hate credit card debt
June 12th, 2008 | by mbhunter |Liz Pulliam Weston clarified something that I’ve been at odds with for a while. How can I manage the Carnival of Debt Reduction and still encourage people to get a credit card to save at the pump?
Here’s what she said right at the beginning of her article, 9 Reasons to Love Credit Cards (emphasis mine):
A reader recently mistook me for someone who hated credit cards. He wanted to enlist me in his battle against evil plastic and spread the word that credit cards were the gateway to debt hell.
But he picked the wrong woman. I hate credit card debt. But I love credit cards.
That’s exactly how I feel. I’d do just about anything not to carry a balance on my card for my purchases, but I use my credit card all the time because it’s convenient and because it kicks back a little bit each time I use it.
Credit cards afford some nice bonuses for people who use them wisely:
- Chargeback power. If you’re not satisfied with a purchase, you can have the charge refunded while you resolve the issue with the merchant.
- Extra insurance against theft or damage, for some cards.
- Extended warranties for purchases on some cards.
- Theft deterrence because a credit card purchase does not give direct access to your bank account the way a debit card does.
- Automatic bill payment for most, but not all, services.
- Rewards. These are the most common bonus.
But credit cards can bite back if not used properly:
- Interest payments. This is the first, and most common, consequence of carrying a balance.
- Onerous fees for going over the limit on the card or being late with a payment.
- A high or “default” rate that can be triggered by some tardiness on a totally unrelated account.
- More difficult and/or costly bankruptcy filings than were present a few years ago, meaning that it’s not as easy to have credit card debt dismissed in court.
Weston goes on to say that it’s the people who don’t use the cards properly who pay for the rewards for the 30% of households that do.
So yeah, I’d find it very difficult, and likely pointless, to try to buy things without a credit card, because the benefits of using the card outweigh any dangers. This is not to say that everyone can, or should, but there’s nothing wrong with using a credit card responsibly.
13 Responses to “Love credit cards and hate credit card debt”
By Potatorioles Fan on Jun 12, 2008 | Reply
I totally agree with you. There are both good and bad things about credit cards. You just have to know how to manage your spending wisely.
I think the most recent good thing is that more credit card companies are going green, and they’re offering carbon offsets as rewards.
By Mrs. Micah on Jun 12, 2008 | Reply
My plan is to eventually develop a strategic use, but I’m waiting to see how easy it is to handle my new card. Better to figure it out than get caught in any of the traps.
I sometimes think of them as cars. Highly lethal weapons which kill thousands every year (ok, kill might be too strong for CCs). But also quite useful. Bike riding and walking and busing can also get you the same results, just not as easily.
By mbhunter on Jun 13, 2008 | Reply
I had a non-rewards CC for quite a while, and finally realized that I could do better with a rewards card because I had never carried a balance .
By budgetsaresexy on Jun 13, 2008 | Reply
I agree 100% – I allot a budget to my credit card each month to make sure i’m in the clear, and then pay it off every month so there’s no interest.
w/ the exception of a cple months (due to wedding expenses), i’ve been rockin’ it for years.
Credit cards = my best friend
By Steve on Jun 15, 2008 | Reply
I akin credit cards to alcohol. While there are many people who can use credit cards wisely, there are many who have hard-core spendthrift personalities. Those people will get deep into debt with credit cards for useless reasons, and then they are in too deep and their lives spiral out of control. Alcohol is the same way; some people have highly addictive personalities or chemical makeups that will cause them to abuse alcohol. Alcohol, in the hands of those without the ability to limit consumption, will cause that person’s life to spiral out of control.
In both cases, there are people who are responsible with alcohol and credit cards, and they add a benefit to one’s overall quality of life. I like a fine wine, good beer, or exquisite scotch once in a while, but I hardly make it a habit. Same with credit cards. I use them for getting cash back on purchases that I would make anyway (gas, clothes, food), and I pay off the bill each month. I also use it for work expenses, so I get rewards from my card while I get reimbursed from my employer…a win/win situation.
Neither credit cards nor alcohol is inherently evil; however, the unwise use of either can cause quite a bit of misery for the abuser and those around him/her.
By T'pol on Jun 15, 2008 | Reply
I carry two credit cards and charge most of my spending but I never carry a balance. Both cards are paid in full every month. I have an Excel sheet on which I track my budget on a daily basis. I always plan my purchases and use the rewards wisely. For the last 6 trips I had to the US in the last 10 years I never paid a dime for my flights. In two occasions I even could buy two tickets. A direct flight from Turkey to NY is never cheap. I totally agree with the commenter whos says it’s like alcohol.
By Pamela Grundy on Jun 15, 2008 | Reply
People who are able to use credit cards responsibly are few, which is why the cards are profitable for credit card companies. The interest rates, fees, and fee and rate practices should be more heavily regulated IMO. Yes, people should be responsible with credit, but that includes the companies that offer credit. They have a fiduciary responsibility to their customers that they have been shirking shamelessly for years now.
By jay on Jun 19, 2008 | Reply
credit cards need to be used with a fair degree of wisdom and discipline or NOT AT ALL!!
Bad bad credit cards…I only use my debit card now – if it’s not in the bank, I don’t spend it..
By Lillian on Aug 12, 2008 | Reply
Spending wisely and responsibly is the most important thing to do when using a credit card. Try looking for a rewards card that gives you points for spending on that card (if your going to spend the money anyways, why not get something for it?)Don’t charge what you don’t have the money to pay off and pay your bill in full each month. Also, go to a website that has card holder reviews so you can see the opinions of other people and also read up on the rates, fees and anything else about the card that you can find (better to have no surprises later=))! I used the CardOffers website and right now they are having a promotion where they will send you a check if you are approved for one of the cards in their promotion section.
Happy Spending!=)
By Money magneto on Aug 21, 2008 | Reply
I hate all credit cards expect those that offer 0% on balance transfers.
By Jules Carney on Aug 23, 2008 | Reply
“Wow”, it is so nice when someone break such a hard topic to understand very easily. I am very glad to see you here again.
Done a brilliant job and Best of luck for your upcoming one!
By Jarod on Sep 11, 2008 | Reply
I’ve been reading through a few similar blogs, I like what you have to say. IMO, credit card companies have been exploiting American consumers through unethical, yet “legal”, practices. Its a shame…
By excel budget template on Jul 3, 2009 | Reply
I think the latest is good that more credit card companies are going green, and carbon emissions are offered as a reward.