Fell in love with the Starwood Amex when I read about it at this site:

http://www.milecards.com/editorschoice.html

If you know you’re going to need something, budget and save for it. Have a savings account for contingencies. If it’s too expensive, do without.

The only reason credit cards exist at all is because someone makes money off the scheme. Are you a sucker?

I agree with you. Even using your numbers of approximately 1/3 pay off their balance each month, that leaves 2/3 that carry a balance.

That means twice as many people are losing at the game as winning, if you want to call it winning. Double the number are paying interest on borrowed money with terms that can change on the creditors whim.

I am not saying CC are defective, they actually work exactly as designed. A minority claim to “win” so that a majority get suckered into thinking they can “win” also, but of course they can’t because THE SYSTEM IS RIGGED. It has to be to exist in the first place. It is subsidized borrowing of money.

Unfortunately, the outcome is defective.

I have NEVER seen a valid reason for their use in a personal situation. I have seen people try, with the typical reasonings of convenience, liability protection, rewards, float, no interest, other peoples money, safety, less cumbersome, credit score, compilition statements, easier record keeping, less bills to pay, etc.

Factor in the risks associated with their usage, and the only parties that consistently benefit from CC usage are the companies that issue them.

For the record, I don’t think CC will ever charge interest for everyone (aka those that pay their balance in full) like you said. They are still making their money no matter what. Even in a worse economy like now they are likely making more in interest. If anything they will lower the rewards or increase their merchant fees.

You mentioned checks in passing. I for one would love to see checks go away as they are far more apt to fraud than either CC or DC. Not to mention I always seem to get stuck behind some moron in the express lanes at the store that takes 5 minutes to write out there check, then stand there and record it in their register. Sorry, big pet peeve of mine.

Kevin

However, renting a car for business trips has been a nightmare! First we couldn’t rent with a debit card without lots of other ID like your utilities bill (always in your purse, right?) then we could but not for a mid-sized or larger vehicle. And the rules keep changing. Every year we rent a minivan or SUV for our business trip but this year we found out at the last minute that we couldn’t any longer. Same company, new rules.

And for hotels they can put a big hold on your debit card — which means tying up $500 or more of your checking account dollars you planned on using on that trip.

So a credit card is really best for business travel where you need them to be able to put holds on credit without it holding up your actual money.

But I still use cc’s exclusively and put everything possible I buy on them. I pay off @ month and have for 4-5 years. And with Citibank I earned over $1200 in 4 yrs. & never paid them a cent. I budget so much @ month & subtract it from the front of my ck bk on payday to pay the bill when due. I never carry more than $50 in cash & usually less.

I do not worry about my credit, as I am over 70 years old and feel I will not ever need a lot of credit. I have 2 very small retirements, my SS, Medicare, and a good insurance policy offered by my late employer, the State of MO. And, basically, my wants & needs have been lowered. I can go into stores with lots of lovely things, walk around with my hands in my pockets, and walk out w/o spending a cent. Loverly!!

I do get 1% cash back with this card, but that’s not even a factor. It amounts to about $2/month. Rewards are totally overrated–you only get large amounts of rewards if you spend a much larger amount of money.

Hotels, airlines Holding extra– Yes they do. Call before and get their policy so you are prepared. When we went on vac, I spoke to the hotel acct dept and confirmed that they would add $50 per day to my debit charge at check in, and they would reverse any unspent amt 3 days after check out. Would I rather not have the extra hold? Of course, but not so much that I would go back to using credit cards.

Not writing down charges and getting overdrawn–
That’s your fault. Using CC takes discipline to not overspend/ pay off every month. DC takes discipline to record correctly. Choose your poison :)

I understand what you are saying. Personally, I do not keep a large amount of money in my primary checking account. I keep much more in a linked money market account that I transfer from when needed.

In my situation, your example is unlikely. All my debit card transacions show pending at a minimum of the day they are debited, and usually up to three days, so I have ample time, from one to three days to not only see if any fradulent activity has happened, but to stop it before it is debited.

Therefore the likelyhood that someone could drain my account is quite low. I check my accounts daily. The likelyhood that I am out of money is also remote because I don’t keep much in my checking account linked to that debit card.

So yes, there is some slight risk, but nowhere near the amount in credit cards

As I said before, I keep reading other talking about convience, points, protection, paying no interest, etc.

With my debit card I also pay no interest, have similar protections, have similar convience, and have no bill, no worries, and little risk.

I get that some people value the rewards. That, and credit are the only differing variables from debit cards. Everything else is the same.

I personally don’t value the rewards, because I don’t find the usage, effort and risks associated with credit cards worth the “rewards.” To me, they are not rewards, they are carrots. I don’t do carrots.

I also don’t believe in borrowing money if you don’t need to. I guess I am different. I don’t like to borrow anything. I don’t borrow sugar, or lawnmowers, or friends cars. I don’t like the liability. I like to own, not rent. Using a credit card is borrowing money. It is being in debt. It may be small or short term, but it is still debt.

Credit cards are nothing but renting money. People can sugar coat it however they want, say it is convenient, say they pay off their balance each month, say they have never paid a penny of interest in years, say they value the rewards and generally try to convince themselves they have gamed the system.

While I will not argue with the fact that $100, or $500 in rewards or points or whatever is valuable, one must always calculate the risk in achieving a reward. That is the number one rule of investing. To me, the risks outweigh the rewards. I am positive that for most credit card users, that is also the case, otherwise there wouldn’t be rewards to begin with.

As for your improving your credit, be careful. Even if you pay your balance off each month, if you have a balance at the time of credit application, it will show up and count against you. I see it every day.

This discussion is excellent, and the point of it isn’t whether you are comfortable with cards, whether you can control your spending, or anything else. It is the big picture I am concerned with. I have excellent control, and would have zero functional problems with using a credit card from a controlled spending perspective. That is not why I abhorr them.

It is because they are time bombs. They may not be for some of you, but they are for 9 out of 10 people who use them. They cause suicides, divorce, and many other problems. I have seen countless intelligent people with all of the answers fall into the trap.

These people had great intentions. They never wanted to get into debt. No one does. They faithfully paid off the card each month. The card was a tool for them, just like you It offered protection. It offered peace of mind. It offered rewards. points. They paid it off each month, until they couldn’t. Life got in the way.

Life has a funny way of doing that. It may not have got you yet, may not ever, but it gets most of us at some point in time. I have never heard of debit cards causing societial problems. Checks either. Or cash.

Credit card debt – different story. It will be the second credit bomb after our current one. Cards have become many peoples last refuge.

Because of this, I am confident change will take place. Using a credit card will likely in the future start costing everyone interest. The average grace periods have already shortened, and the rates are already starting to rise. Soon you will have to use your own money if you want to pay no interest.

Good luck

Everyone should be wary of using debit cards to pay for hotels and airline tickets. Quite often, either or both put a hold on your account in an amount larger than what you’re going to owe. Hotels definitely do this as a matter of course. You never notice these holds on credit cards because by the time they show up online, on your statement or bill, the hold has been reduced to what you actually owe but on debit cards (and the credit card companies KNOW that hotels do this), it can often tie up a significant amount of the money in your account. If, say, you’re going on a trip with your debit card and you have $3k in your account and your hotel expenses are going to add up to $1500 – you think you’re set. Half for hotel half for everything else. But, with the hold on your account, that $1500 can routinely tie up $2k or more, making you significantly poorer for the short term than you thought you were.

Hotels do this to ensure that you don’t run out on a huge bill with tons of added charges like room service, movies, spa time, etc. They also do it to make sure that your card can in fact take all of those charges and you won’t be standing there at check out trying to pay with the lint you find in your pocket.

So, for hotels, use cash or credit but be wary of debit. When I worked at a hotel we would see this occasionally, someone staying would try to pick up the tab on a big dinner (or not so big for those not so good with the $$) and the card would be denied because of the hotel hold.