Don’t Hate the Credit Card

Posted by Madison on January 6, 2008

We’re headed to the airport today to head back home after our 2 week vacation. I’m going to postpone my normal weekend roundup (look for it on Tuesday). I just couldn’t resist another credit card article before Debt Free Revolution and I call a truce in our debate about credit cards.

A comment in an email from a reader, jejily, really caught my eye:

Unfortunately, putting a credit card in my wallet is like putting a six-pack of beer in front of an alcoholic. One purchase (or one beer) is reasonable, but for addicts (and I’m a shopping addict, for sure), we can never stop at just one.

And I do have to agree, for some people giving them a credit card is a recipe for disaster. But like all vices, you can’t fault the credit card. Cash Money Life compared Credit Cards and Guns linking the common denominator: misuse.

Alcohol, guns, shopping… It sounds like you can insert any bad habit or addiction and blame the object not the person. I’m getting a little off topic here, so let’s get back to the basics.

Successful use of a credit card involves:

  • Don’t spend more than you have.
  • Pay your balances in full.
  • Get the best reward credit card you can find.
  • Watch your statements for mistakes.

Ana addressed the rewards programs in her post yesterday:

I can honestly say I have not seen any credit card reward that is enticing enough for me to put up with credit card companies’ games. 

Well Ana, you haven’t heard about my Fidelity529 credit card. 2% of all my purchases are put into my kids 529 plan! And it’s run by FIA Card Services, which has great customer service. We’ve had the card for years and never had a problem. Unfortunately though, the current card isn’t offered to new cardholders.

Here’s more people making money using reward credit cards responsibly:

A stumble upon user commented that she wonders if I work for the credit card industry. For the record, I do not. Actually I do not use a credit card for all of my purchases (gasp!)… find out why as we wrap up the debate.

Read earlier posts in the Great Credit Card Debate:



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Comments to Don’t Hate the Credit Card

  1. I agree. I tried to direct my negative comments about credit cards at the credit card companies (when they act evil). I also accept that I have used credit cards irresponsibly in the past and I am better off without them due to MY lack of responsibility.

    Eden

  2. I agree 100%. If used properly, credit cards, guns, alcohol, or “fill in the blank” can all be beneficial. I use my credit cards for all the good reasons you highlighted in your previous article, and I pay them off in full every month.

    If your situation is different though – it’s best not to mess around with them.

    Thanks for the mention! 🙂

    Patrick

  3. Madison, I have stated several times that I have nothing against the little plastic rectangles themselves…but it is the companies behind them that are not “kosher”. You mentioned you haven’t seen Maxed Out yet…I also recommend In Debt We Trust and the PBS series on “The Secret Life of Credit Cards” (I think that is the title). Perhaps my biggest beef is the marketing they do to the average consumer. More in another post on my blog I think 🙂

    Debt Free Revolution

  4. Absolutely agree. I think the key to not overspending with credit cards is not thinking about it at all when shopping. Better yet – not go to stores unless you really need something. When I think of buying or not buying something I ask myself the same questions I’d ask if I were spending cash – do I need it? do I want it badly enough? Is it worth the price? how would I use it? where would I wear it? how long will this item last? Since I don’t even consider things I cannot afford seriously, I don’t even have to ask myself if I can afford it: if I even stop and think about buying something than I know I can afford it; otherwise I just look at it as a “museum piece”. Actually, there are things I can easily afford and still don’t consider because I consider the price ridiculous. The decision how to pay is made at the register, it has to be completely decoupled from the decision of buy or not to buy. If someone cannot separate the decision to buy not to buy from the ability to charge or doesn’t know what one can afford, one shouldn’t use credit cards. Another requirement is basic rule we should’ve learned in childhood: if you borrow money you always have to pay it back. The corollary here is – ability to borrow not the same as purchasing ability.

    As to credit card companies being evil – these are the same banks we use for other purposes. So then we should say banks are evil. They are in business to make money. They routinely loose a certain percentage of money as some people don’t pay. I don’t view them any differently as any other business. Sure some practices like changing the due date is nasty, but it is my responsibility to look at the due date when I get the bill. As to universal default – ask yourself if you were lender, wouldn’t you want to know if someone didn’t return money to someone else? Mistakes? They happen with every business.

    As to marketing – all businesses market, sometimes stuff you don’t need, sometimes stuff we cannot afford. It is up to us to be intelligent enough to learn to resist any kind of marketing.

    BTW – I saw the PBS program.

    kitty

  5. It’s hard to place blame on the credit card companies, as kitty points out, they are the same banks… often the same ones that issue the debit cards!

    Eden, great job taking responsibility! I like it when people step up.

    Kitty, I like the “museum piece” idea!

    Madison

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