Comments on: The Credit Card Holy Wars: There Is No “Right” Answer … But Here’s My Take

By: Charles Cohn

Charles Cohn — Sun, 14 Mar 2010 20:44:58 +0000

The person who refused to use rewards cards because they were “dirty money” is passing up a good thing unnecessarily. Remember that dirty money spends just as well as clean money. The only thing you have to worry about is that it’s legal and won’t get you in trouble.

By: deRuiter

deRuiter — Sun, 14 Mar 2010 13:18:16 +0000

Credit cards are wonderful tools which offer frequent flyer miles for rewards. Pay off your balance twice a month, watch those free miles accumulate and enmjoy the flights. If you don’t have self control, then don’t have a credit card. I’m with the writer who says a credit card is no more dangerous than a hammer, if you use the tool correctly it won’t hurt you, it will help you accomplish your goals. Don’t spend more than you would spend in cash each month, and pay off your balance as soon as it’s due. You’ll do fine!

By: ChrisD

ChrisD — Sat, 22 Aug 2009 20:42:16 +0000

The people who say that credit card companies are NOT evil and that all you have to do is not carry a balance are being a tiny bit naive.
Of course it is important not to carry a balance and if you have a lot of debt that you can’t pay off then you are not managing your finances well.
BUT that is no excuse for the following practices:
If a person with many credit cards falls behind on ONE card, increase the interest rates on the other cards.
Or lower the credit limit on another card, bringing that person over the limit and then charge fees and late penalties AND raise the interest.
Charge a very low minimum payment. This looks like it is a favour, but it’s a psychological trick. It makes people more likely to rack up debt as it is affordable and then, by paying only the minimum, they pay a lot more interest over the longer lifetime of the debt.
Give someone a card with a low introductory rate and allow balance transfers. Then apply a ridiculously high rate to NEW purchases, but apply payments to the old low interest purchases so that they whole (unaffordable) original debt must be paid off before you can get rid of the high interest debt.
See e.g.Maxed Out: Hard Times, Easy Credit by James D. Scurlock

By: creditcardquick.com

creditcardquick.com — Fri, 10 Jul 2009 16:11:26 +0000

People, I think, have varying degrees of misconception on the idea of credit cards and sometimes arguing about this is endless. We cannot judge them by simply relying on their comments, they must have a reason for doing/saying those things.

By: Queercents » Blog Archive » Holy Crudknuckles, I’m in Debt!

Queercents » Blog Archive » Holy Crudknuckles, I’m in Debt! — Tue, 06 Jan 2009 14:26:03 +0000

[...] LOT of people are in credit card debt. The average American has $9000 in consumer debt. I’m going to guess that the average Queercents reader has less than that, because if [...]

By: chris

chris — Wed, 19 Mar 2008 16:21:07 +0000

Now that you are out on your own and self employed, I would be very, very careful of having credit cards. You are no longer on a monthly or bi-weekly pay schedule which makes things like bills on a monthly basis a whole new beast. I switched to cash and debit cards after learning a very hard lesson the first year of my business…you may buy things on credit and not have enough income from your biz at the end of the month to pay off.

…just watch your income streams.

By: reulte

reulte — Tue, 18 Mar 2008 14:56:49 +0000

Even if the 12-18% for credit card vs cash users is correct – it is only a statistic for an aggregate group and does not apply to any given individual.

I have 3 credit cards (I can hear the gasps of horror right now!) one of which was my first ever – establishing a length of credit of over 20 years. However, I don’t like the terms anymore and use it only occasionally on eBay for items less than $50 – this keeps it active. The second credit card was offered by my bank as an adjunct to my account and I accepted but no longer use that card. My third card, the one I use, is a rewards card and every so often, I go online and ask to trade my points in for a check. In paying my credit cards, I don’t wait until I get a bill, I pay the credit cards off every time I get my money via direct deposit – that is every two weeks I pay off whatever is due on my cards. At that time I also monitor activity — just in case.

Obviously I believe credit cards are a tool. However, they are a tool requires training for best usage. I think the problem is that so many people don’t understand that it takes training.

By: Jacinta

Jacinta — Tue, 18 Mar 2008 07:10:52 +0000

I tried posting this earlier, but it got eaten by the gremlins.

I’ve read every comment, and at no point does anyone point out that, if you are in debt, canceling your paid off credit cards can be disastrous for your credit rating.

Your credit score depends on a whole lot of things, but one of these things is easily in your control. It’s your debt to credit ratio.

Imagine you have 3 credit cards. One owing 5k with a limit of 5k, one owing 4k with a limit of 4k and one just paid off with a limit of 3k.
Right now your debt to credit ratio is 9:12. That’s not actually too bad, and congratulations on paying off card number 3! So now you cancel card number 3. Suddenly your debt to credit ratio is 9:9. That’s *awful*. It not the size of the numbers that count, but the closeness of the fractional number (debt/credit) to 1.

If you are still in debt, freeze card number 3 in an ice block, cut it in half, throw it out – but do not cancel it. Wait until your debt to credit
ratio has reached closer to 1/2 or less. If owning these paid-off cards is costing you a lot of money in annual fees, then cancel them at a rate of one per year, starting with the one with highest annual cost.

Be aware that opening lots of new credit cards over a short period (even for balance transfer) can also impact your credit rating.

By: Jacinta

Jacinta — Tue, 18 Mar 2008 00:44:28 +0000

I’ve read every comment, and at no point does anyone point out that, if you are in debt, canceling your paid off credit cards can be disastrous for your credit rating.

Your credit score depends on a whole lot of things, but one of these things is easily in your control. It’s your debt to credit ratio.

Imagine you have 3 credit cards. One owing 5k with a limit of 5k, one owing 4k with a limit of 4k and one just paid off with a limit of 3k. Right now your debt to credit ratio is 9:12. That’s not actually too bad, and congratulations on paying off card number 3! So now you cancel card number 3. Suddenly your debt to credit ratio is 9:9. That’s *awful*. It not the size of the numbers that count, but the closeness of the fractional number (debt/credit) to 1.

If you are still in debt, freeze card number 3 in an ice block, cut it in half, throw it out – but do not cancel it. Wait until your debt to credit ratio has reached closer to 1/2 or less. If owning these paid-off cards is costing you a lot of money in annual fees, then cancel them at a rate of one per year, starting with the one with highest annual cost.

Be aware that opening lots of new credit cards over a short period (even for balance transfer) can also impact your credit rating.

By: Just Simple

Just Simple — Mon, 17 Mar 2008 08:32:04 +0000

I feel rather than blaming and categorizing credit cards as evil or something, lets just focused on our disciplines.

Credit cards are just a tools. We are the users and it’s up to us to decide whether it’s evil or not.

By: Jeff R

Jeff R — Sat, 15 Mar 2008 23:33:21 +0000

American Express provides a great service by doubling the manufacturer’s warranty. I recently bought and HD TV and having AE double the warranty took care of any consideration of a service contract that I usually turn down anyway.

AE will also help customers resolve any issues should a purchase not prove satisfactory.

All my credit cards are paid in full monthly.

By: Mark

Mark — Sat, 15 Mar 2008 01:27:37 +0000

It really comes down to your discipline. Some have it, some don’t. In my case, I have a mixture – depending on the type of debt. I have paid off gas credit cards each and every month for 20 years without a hitch. However, I’ve also been caught in the trap of over-using a regular credit card to the point that I didn’t pay it off each month as planned. That has cost me thousands of dollars. I finally had enough.

I’m now off of all credit cards – including gas cards – after going through Ramsey’s FPU last year. I admit my life is different. I manage my finances closer than before – and that’s the real point.

If you are disciplined enough to pay everything off in the first place, good for you! However, most people don’t have the discipline – that’s why the average household debt is so high. Cutting up cards a la Ramsey is attacking the symptom, but it also forces you to a place to where you have to deal with the root cause – yourself.

By: Greg

Greg — Fri, 14 Mar 2008 22:32:27 +0000

I use a brokerage account that includes a credit card as well as a American Express. Both combine the dollars spent for a rewards program. My wife and I charge everything, including most utilities. Cards are automatically paid off every month. In 10 years I estimate I have received $10,000 in rewards, mostly taken in the form of Home Depot certificates. I did my own home renovation, saving an additional $5k. Doesn’t work for everyone, but has been a boon for us. You have to be aware of your spending.

By: Michelle

Michelle — Fri, 14 Mar 2008 18:36:42 +0000

The three keys to credit cards: lists, lists, and lists. Buy what’s on your list. If you know what you’re doing before you leave the house, your method of payment is irrelevant. There’s no wiggle room for CC users to spend more, as cash users claim.

That said, I appreciate that some people are uncomfortable with CCs, but I don’t think advocating for everyone to give them up is sensible.

To use your tool analogy, I’d probably cut my hand off with a jigsaw…but I’m not going around telling carpenters to stop using them.

By: LC

LC — Fri, 14 Mar 2008 17:46:53 +0000

Another advantage to credit is that debit cards do not offer the same protection as credit cards. Case in point: I was on vacation and made a purchase outside of my typical spending area. The bank called and asked to confirm that it was really me. I was very reassured thinking that they would cover me in case of fraudulent activity. A few weeks later, there was a $90 charge that I did not authorize. I called repeatedly to complain and have them remove it and they spent weeks “verifying, etc…” eventually they said that they cannot cover it.

Also, you can’t rent a car with a debit card.

And… if you overspend with plastic, you will still overspend with a debit card.

By: dougis

dougis — Fri, 14 Mar 2008 17:27:33 +0000

I have to agree with the Credit card as a tool concept.
I carry one card for work (which is an airline mileage card). We have two others that we use on a regular basis.
1) A rewards points card
2) A Upromise card (the rewards go into a 529 account for our kids to use for College).

My wife pays them off each month so we don’t carry a balance, but it is nice to know that if something does go horribly wrong we have several thousand $$$ in limit that can be used in the event of an emergency (not the best way to use them, but if we need them they are there) and in the meantime we are keeping our credit rating high so we pay a lower rate on our mortgage.

By: StackingPennies

StackingPennies — Fri, 14 Mar 2008 16:13:04 +0000

@NCN:
“4. I think that most folks will agree that a MAJORITY of people (not ALL but MOST) – overspend when they use plastic. I’ve seen numbers between 8 and 25 percent!
5. I earn reward points when I use my debit card, so I don’t need reward points from a credit card.”

I just don’t get this. How is using your debit card different than credit (in regards to overspending) if you pay credit off each month anyway.

By: SWFL_Dan

SWFL_Dan — Fri, 14 Mar 2008 15:37:41 +0000

“If nothing else, other people will be building wealth by borrowing responsibly (such as to buy land or a home) and you’ll be sitting in some trashy rental because you don’t have enough cash to pay for a new house without borrowing.”

See, now this is a prime example of someone that probably should not use credit. They are unaware, apparently, that buying land or a home is a FANTASTIC way to build wealth in the slowest possible way – in most cases, you lose money buying a home.

The proof of this is all over the internet. The only people that consistently say having a mortgage is a GOOD investment are the mortgage companies.

Start here: http://millionairemommynextdoor.blogspot.com/2007/10/rent-vs-buy-hidden-cost-of-lost.html

By: Bill

Bill — Fri, 14 Mar 2008 14:59:47 +0000

Couple of comments. My wife and I have been on the Ramsey plan for about 6 months (and are debt free, fully saving 15% for retirement, and saving for a house (we owned one previously but are in transition.) At any rate, we’ve gone without CCs (all cut up) for 6 months now and don’t miss them one bit. In that time, we’ve bought items online, purchased hotel rooms and plane tickets, etc. We definitely spend less than we did in our CC days with no difference in lifestyle.

I’ve come to resolve my situation like this – I hear time and time again that responsible CC usage means paying off your balance each month. OK. I’d argue, the usage of cards means that, for some reason, you can’t handle your purchases without a 30 to 60 day float. Why not?

Rewards really don’t add up IMO. And I used to go for them too.

By: LC

LC — Fri, 14 Mar 2008 14:49:03 +0000

@Tana – see my post above. My credit score when I bought my house was over 800 and I have never had a credit card. Explain how “establishing my credit” with a credit card would have helped me…