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The Great Credit Card Debate Continues….

Ana at Debt Free Revolution and I are debating about using credit cards in 25 Reasons to Love Credit Cards [1] and Ways Credit Card Companies Separate You From Your Money [2].

So far it seems as though the majority of the debate is what can a credit card do that a debit card can’t do? And it seems as though the fraud protection component as Eden points out [3] is somewhat confusing.

But other earning potentials still exist for credit cards. In fact, if you can find a debit card that offers 2%-5% cashback, offers float, and can make us $11,000 per year [4] in credit card arbitrage then you might have me sold! 

To put things in perspective we have some financial rules we live by when using credit cards. We do not live beyond our means. All of our credit card purchases are paid in full at the end of the month and we do not pay any interest.

Many of the cons are associated with carrying balances, paying interest, and spending more than you can afford.

Here’s a look at some of Ana’s points and my counterpoints:

Double-Cycle Interest Billing (paying two months interest in one month): 

I don’t believe in carrying a balance on credit cards or paying interest. If you always pay your purchases in full, you don’t have to worry how many times they charge you interest. (I will admit it is pretty dirty though).

Rate-Jacking (or raising your interest rate):

Again, if you are paying in full, the interest rate shouldn’t be an issue.

Bait and Switch (or approving you for a higher interest rate):

As Deepali points out in the comments:

Also, bait-and-switch isn’t really that, it’s more like failure to read the fine print. The 0% isn’t guaranteed until they pull your credit report and make a decision, and they’re somewhat upfront about this (ie, it’s in the disclaimer, but the responsibility is on you to read it).

Ana does make some great points that I agree with:

  • Universal Default sucks, especially if it is due to inaccurate information.
  • Moving the Due Date game, like what happened to Lynnae [5] is really not cool and I too would be steaming mad!

Ana refers to credit cards as “hot” (venomous) snakes. Wow! What I’d really like you to consider is if you only use a credit card for what you can afford, you don’t carry a balance and don’t pay interest aren’t credit cards more like soft cuddly teddy bears? Ok, I’m not going to go that far… but there are benefits that result in financial gain if you can use the cards responsibly.