No, credit cards are not evil

A little over a month ago, my husband and I were getting ready for a five-night trip to Jamaica. And as usual, we went to great lengths to budget for anything and everything. For starters, all but $97 of our airfare was paid with points I earned with my Chase Ink Bold Business Card, and that expense was taken care of months before. The fact that we were staying in an all-inclusive resort also meant that I didn't have to budget for meals either, an added perk. The only expenses left to consider: round-trip transportation to and from the resort and money for tips. Once that was taken care of, I looked forward to a week of fun, mojitos, and beach time with my best friend.

When bad weather attacks

So we left and didn't look back. Unfortunately, we were totally unaware that a giant snow and ice storm moved in right after we left, burying places like Charlotte, N.C., the city to which we were supposed to fly back. But we weren't worried. Hell, we were having too much fun to concern ourselves with the problems of the world. That was, of course, until it was time to leave and we hopped on the computer to check in for our flight.

Cancelled.

What's even worse was that the same flight was cancelled the next day too. And after calling the airline and finding out that all flights were full or cancelled for the next two days, we did what we had to do. We ponied up the cash for two more nights at the resort to the tune of $520, which was much more than what we paid to begin with. Ouch.

Even though it was slightly demoralizing to spend more than we planned, I secretly hoped that I would get reimbursed for those expenses. How, you ask? I was pretty sure that the Chase Ink Bold card I used to pay for our flights offered free travel insurance as a benefit of owning the card. So, when I got home, I immediately called Chase and inquired. They then mailed me a claim form which I filled out and mailed back, along with all of the requested documentation. The verdict: They sent me a check for $582, completely covering our additional two hotel stays and lunch and dinner on the way home.

The perks of paying with credit

Travel insurance is just one of the oft-ignored perks of paying with credit. Some other rarely mentioned advantages include things like price guarantees, return protection, free extended warranties, theft, breakage and loss protection, and roadside assistance. Another big one: Fraud protection. I wrote about being the victim of a moving scam late last year, and one thing I wasn't able to mention at the time (because it hadn't happened yet) was that the same Chase card's fraud-protection coverage refunded the entire amount I was overcharged. This left the scammy company and the bank to work it out among themselves, which was a huge relief for me at the time.

Of course, some of the biggest perks of using credit come in the form of points and miles, something that I talk often about as a staff writer for Frugal Travel Guy. It's true that when credit is utilized in the right way, it can become a powerful tool for earning perks like international and domestic travel, gift cards, and cash back. But to get there, you have to make credit work for you, and stop letting it work against you. This does require a certain level of discipline, but the benefits can't be underestimated. Just ask anyone who has traveled the world for pennies on the dollar. They'll tell ya.

No, credit cards are not evil

Credit-card use is such a controversial topic, and for good reason. Ask anyone in debt and they'll tell you just how easy it is to charge up a card without even realizing it or to fall on hard times and resort to using credit for everyday expenses. When almost everyone you know has had some sort of run-in with unruly credit-card debt, it's easy to assume that credit cards are the culprit that must be avoided at all cost. Personal finance gurus like Dave Ramsey perpetuate this belief by making blanket statements about the use of credit, like this one:

“Responsible use of a credit card does not exist. There is no positive side to credit card use. You will spend more if you use credit cards.”

Dave Ramsey

Although I haven't found that to be true in my personal experience, I think it's sound advice for people who have run into problems in the past. But I don't think that the same rules should apply to all of us. Obviously, plenty of people use credit responsibly, and they do so without any harm to the credit or their wallet. How? They make credit work for them.

Become your credit card's master

Fact: Credit cards are not inherently good or bad. They are a tool, and it's up to you to decide to master their use for your benefit or let credit card debt become your master. Your choice, but I would personally choose the former. If you want to get all of the benefits from using credit without all of the headache, here are a few tips that can help:

  • Use your statement as a budgeting tool — The fact that you're using credit can actually help your monthly budget if you play your cards right. Start by signing up for an online account, then use your statement to track your spending in individual categories.
  • Avoid credit card fees –– In order to benefit as much as possible, it's important to avoid paying any costly and unnecessary fees associated with your card. This means paying on time to avoid late fees, and making sure to weigh the pros and cons of any annual fee you're asked to pay.
  • Never pay interest –– No matter what you do, don't pay interest. Make sure that you only put your regular expenses on your card, and pay them off before they are due each month. Remember, paying cash hurts, and it should hurt. The same rule should apply to charges you put on credit.
  • Don't chase points and miles — The fact that you're earning cash back or miles for your purchases is a good thing, but don't use that as an excuse to overspend. The points and miles should be a benefit of card ownership, but it isn't beneficial to buy things that you wouldn't have bought otherwise. Remember, you want to be your credit card's master, not the other way around, right?

How do you feel about credit cards? Do you think they are inherently evil or do you make them work for you?

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Beth
Beth
6 years ago

YES! I sort of feel like the “there’s no such thing as responsible credit card use” rhetoric is pandering to the audience. If you have massive credit card debt, doesn’t it feel better to blame credit cards and credit card companies — and doesn’t it help to know you’re not alone? That no one else can responsibly use a credit card either? However, I think responsible credit card use means understanding the fine print and all the policies that could work against you, not just paying your bill every month. I’m also aware of the ridiculous fees some credit card… Read more »

Jane
Jane
6 years ago
Reply to  Beth

They get a slightly better rate on debit, but if you really want to help your local, small businesses, pay in cash.

Helen
Helen
6 years ago
Reply to  Jane

Perhaps this differs depending on location, but here in Canada, there is a BIG difference between the merchant fees for credit cards and debit. Business owners here have told me that cash isn’t much different for them than debit (assuming it isn’t a tiny purchase like a coffee).
The reality is that even in the case of big businesses, there is a larger-scale downside to using credit cards, especially the cards with big rewards: those high merchant fees end up driving prices up for everybody, regardless of payment method. Just something to consider.

Jane
Jane
6 years ago
Reply to  Helen

I guess I see your point about merchant fees driving up prices, but credit cards also make businesses a lot of money. This is why most places cannot afford not to accept them. As many have already asserted, I am more likely to spend more if I use plastic than if I have to limit myself to the cash in my wallet. I imagine this is even more so the case when you are talking about consumables like food or drink. Just today, I was at an expensive (to me at least) coffee shop. I splurged and got a chai… Read more »

Beth
Beth
6 years ago
Reply to  Helen

@Jane – I agree with you to some extent. Basic credit cards are just the cost of doing business, especially for online or over the phone shoppers. Cash has risks too — such as counterfeit bills, employee theft and simple human error in counting it. However, the cards that offer the most perks and rewards are the ones that charge merchants the highest fees. That’s what I don’t think is fair. Merchants can’t refuse to accept these cards, nor can they charge customers a nominal fee for using premium cards. They aren’t just paying these fee on the goods —… Read more »

Money Saving
Money Saving
6 years ago
Reply to  Beth

Exactly! It’s just an excuse and part of the 5 stages of grief:

– Denial
– Anger
– Bargaining
– Depression
– Acceptance

Most folks stuck in the “mode” of evil credit cards are in the anger stage and looking for someone or something to blame.

Money Bunny
Money Bunny
6 years ago

When I teach personal finance I compare a credit card to a chainsaw. It’s a very very useful tool but if you mishandle it, you can cut off your leg.

Beth
Beth
6 years ago
Reply to  Money Bunny

Love it! And don’t use it when you’re tired, emotional or stressed 😉

HKR
HKR
6 years ago
Reply to  Money Bunny

Chainsaws are so scary to me that I cant’t even watch someone else use one and I don’t think credit should be that scary, so I use a Knife as a metaphor instead 🙂 Knives are very dangerous but extremely useful, and they come in all shapes and sizes, not all of which are appropriate for everyone. Some people don’t need to go beyond a butterknife (debit/prepaid card), most will find a chef’s knife (rewards card) useful for daily functions, and some can make magic happen with a machete (strategized network of rewards cards, ala PointsGuy and MileValue).

jane savers @ solving the money puzzle
jane savers @ solving the money puzzle
6 years ago

Credit cards offer great rewards and consumer protection and that is why I will continue to use them every day.

I don’t make purchases unless I have the cash to back it up. Anything else would be foolhardy and would cost too much in interest. If you are one of those people who can’t control your shopping then don’t have a card but the rest of us are capable and will continue to benefit from the cards.

Anne
Anne
6 years ago

“I don’t make purchases until I have the cash to back it up.” Exactly this.

I adore credit cards. I am traveling all around this country and the world because of their use. Have not paid a penny in interest or fees in 30 years.

Amy
Amy
6 years ago

I know that they are neutral in theory, but every month that I choose to use one, I end up spending more than I should. EVERY TIME. I always pay the balance off, but obviously I don’t have enough discipline to keep my spending reigned in if I’m paying with anything other than a debit card. My credit card use is on furlough this year as I don’t need the temptation to spend more than I need to. I would consider using one again, but probably need to do some research into what card is best for me (the one… Read more »

lmoot
lmoot
6 years ago
Reply to  Amy

You can still use the card and get benefits of points without physically using it. Why not start by setting up all of your auto-pays from it? I have two cards. One for bills and necessities, and one for non-necessities. I find it easier to track myself and hold myself accountable when I can see how much I’m spending on non-essentials so I can reign myself back.

Ris
Ris
6 years ago

You always hear that credit cards encourage spending or that it’s easier to lose track of spending with credit cards, but I’ve found the opposite to be true. If I start out with a $10 bill, it seems to just evaporate. With my credit card, I know exactly where every penny went.

Michelle at Making Sense of Cents
Michelle at Making Sense of Cents
6 years ago

Thank you for this! So many people think that credit cards are evil, but I disagree. The rewards are awesome and if you know how to use them to your advantage, then why not?

Stefanie @ The Broke and Beautiful Life
Stefanie @ The Broke and Beautiful Life
6 years ago

I LOVE credit cards. I wish I could pay my rent with them- more points, miles, cashback, etc.

Beth
Beth
6 years ago

If you did, your rent would be higher. There’s a pilot project somewhere in Canada where a service allows you to pay your rent by credit card BUT you pay the merchant fees instead of your landlord.

For instance, if you’re rent was $800 a month, you’d pay 2-3% of that per month in fees — that’s $16-24 per month. You’d have to have a really, really good reward card to make up for it!

Valerie
Valerie
6 years ago
Reply to  Beth

A lot of the nicer complexes in Seattle have websites set up where you can pay directly (and automatically) through a bank account or credit card, no extra fees that I’ve come across … though I’m sure that it varies by company.

Jeff
Jeff
6 years ago
Reply to  Valerie

If only I could pay my mortgage that way, we’d be earning free flights every year.

I do prefer to have my bills auto-paid on a credit card rather than from a bank account, too many issues with a bill accidentally charging twice and overdrawing an account or the auto-debit getting bounced for some unknown reason and a bill becoming overdue. I’ve had much less issues using a credit card instead and wish all of my utilities would allow it.

lmoot
lmoot
6 years ago

I love credit cards, mainly because of the travel benefits. I’m going to Africa for 5-6 weeks this summer and if I buy the plane ticket with my travel card (which also has $300 worth of miles racked up), I automatically get insured for $250,000 should my plane plummet into the ocean (eep!) or if I become dead or dismembered during my trip. Credit cards are not evil, though I will admit that the companies can and do prey on the ignorant. It was worst in the past and has gotten better with stricter regulations. What is evil is the… Read more »

Julie
Julie
6 years ago
Reply to  lmoot

I hope they can find you in the ocean to give you your $250,000. 🙂

Cindy @ GrowingHerWorth
Cindy @ GrowingHerWorth
6 years ago

I think credit cards are a great tool, when used responsibly. There are tons of people out there, like Holly, who are using them to their advantage. If you’re paying them off in full every month, I don’t see a problem with them. It’s a business transaction. When people start in with the “credit cards are evil” thing, I can’t help but feel that they aren’t taking personal responsibility. I personally got myself into credit card trouble during the credit crisis; I was carrying a large balance because I could “handle the monthly payments”. When my sister defaulted on a… Read more »

Brian @ Luke1428
Brian @ Luke1428
6 years ago

There is research that shows people spend more when using a credit card. While that may not be the case for everyone, it is true of the general population. It seems to me that if you spend more on the card that cancels out any rewards one might receive. I know our spending decreased significantly and our savings rate skyrocketed when we switched to using a debit card and cash. It was like getting a raise.

lmoot
lmoot
6 years ago

Here’s the thing about that “research” (which I’m assuming you’re referring to the mysterious Dun and Bradstreet study). First, no one I know has ever read the study (I’ve heard rumors though that it’s available for a fee, but I haven’t even been able to locate it). Second, since I’m flying blind here, I’m going to assume the study does not differentiate between those with terrible credit managing skills and those who pay their balance off on time every month and follow other responsible credit card habits. Of course credit cards will make you spend more if you are buying… Read more »

Mick
Mick
6 years ago
Reply to  lmoot

Study or no study….I think Brian is right. I spend more money with my credit card than I would if I paid cash. I pay the bill off in full each month so I don’t pay interest and so I end up justifying my spending that way. I don’t buy a lot of stuff, but eating out 2-3x a month and a few other incidentals quickly add up. I can “afford” it. My finances are pretty much in order. (Retirement, mortgage, emergency fund, etc). This month I am determined not to spend extra and then cash starting next month. I… Read more »

lmoot
lmoot
6 years ago
Reply to  Mick

With the exception of taking out pre-calculated 0% interest debt for necessary renovations to make my house live-able, payment method has neither encouraged nor deterred my purchases. I can see spending less with cash happening to someone who may not have enough cash to cover a purchase, and therefore are forced by default not to spend. On the other hand perhaps some people just have more self-control than others and it has nothing to do with cash or credit. I save 50% of my income and therefore have a decent amount of “unclaimed cash” each month, and at any given… Read more »

Ramblin' Ma'am
Ramblin' Ma'am
6 years ago
Reply to  lmoot

Regardless of whether a particular study is accurate, it seems like common sense that most people (not all) will spend more with a credit card. Doesn’t the very existence of credit card debt prove this? People are in credit card debt because they’ve spent hundreds or thousands of dollars they don’t have. With cash, sure, you can overdraw your checking account, but not on the same scale. I do use credit cards but try to use them sparingly (for large purchases, or online purchases like hotels and airfare). *For me*, I do spend more using credit cards for my daily… Read more »

lmoot
lmoot
6 years ago
Reply to  Steve

Thank you for the link, it was an interesting read. It also supports what I was saying all along. Excerpt from the study: “The authors also found that people who said they were more thoughtful in real life about amounts charged to credit spent less when using a fictitious card. In the second study, researchers highlighted the future pain of paying by having 57 participants estimate food expenses for an imaginary Thanksgiving dinner item by item, rather than a holistic total. When they did this, the cash-credit spending gap closed. When people confronted the detailed reality of expenses, it no… Read more »

Jeff
Jeff
6 years ago
Reply to  lmoot

I’m glad to see an article like this, I’ve brought up the issue of discipline before and gotten flamed for it.

As far as studies I take all of them with a grain of salt as it is so easy to cherry pick results and the study group as well. How many times do you see a political poll that makes you wonder “who the heck were they asking?”

Sean Reynolds
Sean Reynolds
6 years ago

Credit Cards are not evil, credit card debt is evil. I’ve had my current capital one card for over 2 years now, earning 1.5% cash back on every purchase, and I’ve never carried a balance. If you can pay with cash you can pay with a card, the difference is the discipline of only purchasing what you can pay off. If you can do it, then you will get 1.5% back on everything you buy. If you cant do it, then don’t use a credit card, even if you carry a balance of 10$ from month to month, it’s not… Read more »

Julie
Julie
6 years ago
Reply to  Sean Reynolds

I don’t agree that it is efficient to dispute a $3.00 charge. It takes both your time and the time of the credit card company to follow up on the charge. I had to dispute a $1.54 charge only because I didn’t know the origination and the card company said it could be a test and that a larger fraudulent amount might hit at a later date. It took a fair amount of time for all parties involved.

Sam
Sam
6 years ago

While I appreciate the honesty in this well written article it doesn’t change the fact that credit cards are a game. Dave Ramsey (and others like him) aren’t arguing that you can’t ‘win’ the credit card game. What they are arguing, instead, is that credit cards aren’t a wealth building tool. Those that are highly successful with money (let’s call them the 1%) didn’t get there by using credit cards (ever). In fact, most of them probably don’t use them at all (if what the Millionaire Next Door says is true). I have lots of close friends and family that… Read more »

Holly@ClubThrifty
6 years ago
Reply to  Sam

I’m not sure why you think people who pursue credit card rewards don’t have the time to make other moves that would improve their financial well-being. Can’t people do both? I rarely watch TV, for instance, so I have plenty of time to pursue my credit card hobby for 30 minutes a day. But I also spend just as much time monitoring my investments and doing as much as I can to make our lives better in any was possible. For many people, it’s just a hobby, and it happens to be one that is much more profitable than cheering… Read more »

Sam
Sam
6 years ago

Holly,

Gambling and drinking are popular ‘hobbies’ as well (and have potential benefits of winning and having fun) but it doesn’t mean they don’t have major risks associated with them as well.

I didn’t say that people with credit cards don’t invest time and effort towards financial planning, my point was the effort used towards managing the credit card is ADDITIONAL time that could be spent towards true wealth building methods.

lmoot
lmoot
6 years ago
Reply to  Sam

I pay a bill once per month online. I look at my transactions about once per week (for about 30 seconds each time). Done. What is this management you speak of? If I had to constantly keep an eye on cash to make sure I don’t overdraft or whatever, that is torturous to me. I don’t keep a lot in my checking account b/c I like earning interest on my cash in my high yield savings until I need the money, therefore over drafting would be a very real threat to me if I didn’t use my cc and I’d… Read more »

Sally
Sally
6 years ago
Reply to  Sam

I find your comment really interesting. I don’t spend time strategizing how to earn points; I automate payments, swipe and move on. It’s maybe 5 minutes a month if I supremely overestimate the time, unless I have a loss covered by my card. Then I fill out a form. I did so in order to use trip insurance. Two forms in ten years! In that case, the 15 minutes x 2 on the form saved me a total of $8000, plus the rest of the goods I received from the points acquired. I have to agree though, I don’t consider… Read more »

Sam
Sam
6 years ago
Reply to  Sally

If you say it only takes a few minutes to manage your credit cards I’ll have to take your word for it… I’ve never had one 😉

Hmphh
Hmphh
6 years ago
Reply to  Sam

I use my credit precisely to save time each month. Not having to track every penny out of my checking account, or dole out cash from envelopes for each and every piddly purchase more than makes up for the minute I spend paying the ONE credit card bill, and two minutes I spend looking over the statement to make sure there are no errors. I have one credit card. I use it for everything. I pay one bill at the end of the month. As a bonus I get travel miles. I spend no time strategizing how to get the… Read more »

Steve
Steve
6 years ago
Reply to  Sam

I never understood the argument “Those that are highly successful with money (let’s call them the 1%) didn’t get there by using credit cards (ever).” I agree with that statement that credit card usage won’t make your rich, but that also seems to imply that it is a waste of time to spend effort on “little wins” Examples: clipping coupons, stocking up on groceries which are on sale, turning out the lights, hang drying clothes, canceling the landscaper and doing your own yard work None of those things will impact if you are in the 1% or not, but each… Read more »

Sam
Sam
6 years ago
Reply to  Steve

Steve,

Little wins are great but do the benefits of these little wins exceed the risks? And if you don’t think there are risks to using a credit card and competing against millions of dollars of research and advertising, why are the majority of American’s in debt? (I know, but it isn’t you. You are only using it for the benefits.)

To me the risks, time and energy don’t come close to the ‘value’ received from successfully playing the game.

Steve
Steve
6 years ago
Reply to  Sam

I hear what you are saying Sam. If you are spending 5% more when using credit cards to receive a 1% cash back, you are paying quite a price for that cash back.

Same goes with clipping coupons. If you are buying junk food which you normally wouldn’t just to save a $1, you aren’t saving anything.

That said, I will stay with my statement that little wins shouldn’t be ignored. The important thing to quantify is if the perceived win isn’t really a hidden loss.

Marsha
Marsha
6 years ago
Reply to  Sam

“You can’t build wealth earning a small percentage on money you SPEND. It is mathematically impossible. You can build wealth earning a small percentage on money you earn and SAVE.”

I’m stealing your quote and telling it to the high school students in the personal finance class I teach. It sums up so well why most people are better off without credit cards. Credit cards, even when used “responsibly” (whatever that means) put the focus on spending, not on saving, earning, or investing.

Sam
Sam
6 years ago
Reply to  Marsha

Bravo for teaching students about staying out of debt because the odds are that their parents (either directly or indirectly) aren’t.

lmoot
lmoot
6 years ago
Reply to  Marsha

This comment and the quoted content makes no sense. How is credit cards as a tool for spending, different than a debit card as a tool for spending? Show me a debit card that DEPOSITS money when you swipe it and I’ll say you’ve got something there, but either way, stating the obvious (that credit cards are for spending) doesn’t rationalize the rest of the comment. Of course it’s for spending. I’d also like to disagree that they are not used for investing. Again, it’s a tool. You cannot possibly know what it can and can’t be used for because… Read more »

Marsha
Marsha
6 years ago
Reply to  lmoot

I didn’t mention debit cards at all. They are also a tool for spending. I understand your point about using a credit card to help you make an investment in rental property. However, I wonder what percentage of credit card purchases are for investment purposes. I’d guess that’s way below 1%. Also, you don’t know what would have happened if you had waited to save up the cash. Once you take one path, the other path is closed off. You’re assuming that you’re better off having used the card, because you got the house ready for these particular tenants. If… Read more »

lmoot
lmoot
6 years ago
Reply to  lmoot

Marsha, most if not all business cards are used toward investment in businesses. Today credit cards are more often being used in the place of loans as well with many cards offering up to 2 yrs interest free. There are numerous opportunities to use credit as an investment in something. 1% seems low but I don’t know enough to make a guess of my own. Personally I would say 50% of my credit card use (where I carried over a balance…always 0% interest) was used towards something meant to earn me more money over time. Whether or not the tenants… Read more »

Patty@homemakersdaily.com
6 years ago

I agree that credit cards are not evil. They definitely have a place.

My husband is self-employed and works by himself. We don’t have a lot of cash in reserve so we use the credit card for materials. If he used our cash to buy materials, we wouldn’t have any money to pay our bills. The credit card is a very helpful tool. We don’t pay an annual fee, don’t pay interest and pay it off every month. I would hate to try to run the business without it.

Sally
Sally
6 years ago

I completely agree. I love my credit cards. I use them in big box stores, online, and for every utility I can. Since I live in the snowy coldbelt, the utility percentage kickback is helpful, though we have a whole litany of things we do to reduce that cost. I do use cash at the mom and pop stores. Things I’ve paid zero for over a ten year period, thanks to credit card rewards: 1)Tickets to the last vacation abroad 2)Snow shoes! 3)Trip insurance (awesome, as you mentioned) 4)Furniture for baby’s room (via accumulated points converted to gift cards) 5)New… Read more »

Holly@ClubThrifty
6 years ago
Reply to  Sally

Exactly, Sally! A little bit of knowledge, practice, and discipline can go a long way, whether you’re paying with credit or cash.

David L. Wright @ Dollar Bits
David L. Wright @ Dollar Bits
6 years ago

Never pay fees; never pay interest; never chase points and miles.

This is excellent advice for everyone who uses credit cards.

Far too often I have heard about people who have huge credit card debt. Eliminate credit card debt first. It is likely to be the highest interest charges of any debt that you might have.

Of course, don’t pay off your credit cards entirely and forsake your other debts, like your regular monthly bills; rent/mortgage, car payment, insurance, etc.) Just pay off as much of your credit card debt as you possibly can.

Don
Don
6 years ago

Dave Ramsey’s incredible success in helping people become debt free is due to his understanding of human emotions and changing behavior. Demonizing credit cards plays a useful part in getting people with credit card debt to move to different spending methods. If you are trying to stop drinking, you pour all your booze down the sink and attend AA. If you have consumer debt, you cut up your credit cards and atted Financial Peace University. Excluding business needs, I don’t see why anyone would need more than one credit card. My guess is that even people that payoff their cards… Read more »

Chuckie G.
Chuckie G.
6 years ago
Reply to  Don

Credit cards are a power tool. If you use them properly they will get the job done better than cash (that is you’ll have consumer protections, rewards, etc.). If you use them improperly they will cut your hand off without so much as a warning. You stated that “You WILL overspend.” To me this is akin to stating that one cannot possibly control themselves with a credit card. I disagree. Using cards or cash has absolutely zero impact on how much I spend. The only thing that determines whether or not I make a purchase is my budget. Period. I… Read more »

Chuckie G.
Chuckie G.
6 years ago

I have a similar story where American Express travel insurance swept in and saved the day… to the tune of $3,500. Short story — Honeymoon in Costa Rica and we rented a car to travel around the country. Car died somewhere in the middle of the jungle. Peugeot for the lose! We hitchhiked back to town and reached a telephone. Called the rental car company and they told us to go back to the car because it was not safe to leave it. Uhhh riiiiiiight. If it is not safe to leave it, I’m not sitting in the middle of… Read more »

Holly@ClubThrifty
6 years ago
Reply to  Chuckie G.

That is great! And I’m guessing that your travel insurance was a free perk offered with your particular AMEX card, right?

I can’t believe the rental place blamed you for what happened to the car!!!!!

Chuckie G.
Chuckie G.
6 years ago

This whole fiasco was awful. Rental car company (a U.S. based company) was wildly unhelpful. This was actually not a free perk. My particular card (AmEx Blue Cash) offers it as an option you can turn on and pay for. They charged me $12 each time I rent a car for said protection. I think that is completely reasonable. That being said this is offered as a free perk on some of their other cards (e.g. Centurion). While not a credit card thing, I believe I can get similar coverage of rental cars through my auto insurer, State Farm. However… Read more »

El Nerdo
El Nerdo
6 years ago

Cigarettes are not inherently evil. Cigarettes help with stress, depression and anxiety. Cigarettes promote weight loss. Cigarettes improve focus, concentration, and motor skills. Cigarettes help people with ADHD. Cigarettes reduce the risk of ulcerative colitis, aphtous ulcers, Kaposi’s sarcoma, and endometrial cancer. Cigarettes are good for schizophrenics. Smoking cigarettes together is a bonding experience. Cigarettes are safe as long as you smoke responsibly. Marlboro Miles and Camel Cash are great way to get cool merchandise you couldn’t get otherwise. You can pick your cigarettes carefully, like organic cigarettes that have no harmful additives. My grandmother chain-smoked into her 90s. 80%… Read more »

Ramblin' Ma'am
Ramblin' Ma'am
6 years ago
Reply to  El Nerdo

Well, now I just want a cigarette.

El Nerdo
El Nerdo
6 years ago
Reply to  Ramblin' Ma'am

Me too! Once a smoker, always a smoker.

Ramblin' Ma'am
Ramblin' Ma'am
6 years ago
Reply to  El Nerdo

I’m one of those people who smokes every once in a while (no, really,) and I normally don’t have nicotine cravings at all, but damn, it does sound nice right now!

I do agree with your analogy, though.

Holly@ClubThrifty
6 years ago
Reply to  El Nerdo

That’s funny stuff, but it’s ridiculous to compare smoking to the responsible use of credit cards. Smoking kills millions of people and causes a plethora of health conditions that also kill.

Credit cards only cause debt for people who don’t use them responsibly. I would rather go into debt than die, but maybe that’s just me.

But hey, if you have a problem with credit cards- or cigarettes- than you should probably stay away from both! =)

El Nerdo
El Nerdo
6 years ago
lmoot
lmoot
6 years ago
Reply to  El Nerdo

You can control the benefits and the hazards of using a credit card.

El Nerdo
El Nerdo
6 years ago
Reply to  lmoot

But why would I want one more thing to “control”?

I need more slack! 😀

Tonya
Tonya
6 years ago

Excellent points, all of them! You absolutely positively should not travel without a credit card. From the travel insurance to the car rental insurance (varies from card to card) to any perks you receive, they really are the only way to travel. Just have your budget and stick to it.

Wealth Tortoise
Wealth Tortoise
6 years ago

I agree they’re definitely not evil. Credit cards are amoral, neither good nor bad. I always think they hold up a mirror to the individual person – if credit cards didn’t exist that person would find another way to cheat reality and achieve self-destruction in another form, e.g. with food, gambling, drinking or smoking.

I’m saying this as someone who has had quite serious credit card debt in the past. But I respect them now, and consider them a valuable and convenient personal finance tool.

Adam P
Adam P
6 years ago

I know I spend more in general using a credit card then I do with a debit card. I always pay my balance in full and I have great no fee reward cards (cash back, travel, etc.) What I wonder if the difference between what I would spend in cash and what I would spend on credit made up for by the convenience of credit, 30+ day interest free loan, and rewards/cash back. I suspect I would come out ahead cash wise if I used debit/cash for everything, BUT…who is to say I would be happier? Maybe I’d be miserable… Read more »

Tina
Tina
6 years ago

At first I thought credit cards were evil because that is how my husband hid his spending issue and would be surprised when a bill collector was calling on a card we didn’t have. After we got those paid off (and hubby spending habits improved) we continued to be anti credit card and paid cash for everything out of fear it would happen again. Now (6 years later)we are trying to build our credit back up(due to hubby spending issue), we have leaned on credit cards to help us build. We pay them off every month which has lead to… Read more »

C
C
6 years ago

I adore our credit cards and use them exclusively. For those who insist that users will overspend I say BAH!! We have a system that maximizes rewards: American Express for dining (3% back) and travel (2% back), Chase card for quarterly bonus categories (5% back), and Capitol One for everything else (1.5% back). All balances are paid in full at the end of the month. Our rebates are ~$1600/year on things we would be purchasing anyway, and that doesn’t include the sign up bonuses and interest earned on money in savings until payments are due. Are we going to be… Read more »

adriano
adriano
6 years ago

cc are certainly not evil. it is a form of business. the product they offer is not something i particularly want. i’d rather pay a bank a fee every time i use a debit card, i think that would be most fair. I see no benefit in bundling up travel insurance and extended warranty and ‘free’ websites and having that paid by the occasional overdraft charge. confusing. to sum up, cc facilitate payments, that is, they transfer money. they earn money by fees paid directly or indirectly by end users. Dave is right. in the big picture there is no… Read more »

No Nonsense Landlord
No Nonsense Landlord
6 years ago

I make a ton of money from cash credit card rebates. And, a credit card is easier than cash.

Deb
Deb
6 years ago

Yes!! I love that you also write for the Frugal Travel Guy. I’m a total miles/points junkie. I never carry a credit card balance, apply for new credit cards on a regular basis just for the sign-up bonuses, and benefit from enough free travel to consider it a nice supplement to my income because travel is one of my disposable spending priorities.

A frugal family's journey
A frugal family's journey
6 years ago

I totally agree with the sentiments from your article. Our family also follows many of Dave Ramsey’s principles but like you I have to disagree with his position that there is no good thing that comes out credit cards. If use properly, meaning like a debit card, spending only what you could theoretically pay for in cash, credit card points and miles are great. Our family supplements approximately half of our Christmas shopping through points from our credit cards!

jim
jim
6 years ago

I,personally, can use a credit card for convenience and pay it off in full without interest every month. However, my spouse can not do that. She will put shit on her cc without so much as a blink of an eye and sees no problem with that until the statement comes in. Then she is always looking at me to pay it off. BS – I’m not doing it. For that reason alone I am against credit cards and I only use them at the gas station. Some people apparently just can’t help themselves once they start and I think… Read more »

lmoot
lmoot
6 years ago
Reply to  jim

And if a grown adult does not have foresight that lasts even 25 days (the average cc cycle), then that is more of an issue with that person than it is with the credit card. And I agree, those people should stay away from credit cards.

Laura
Laura
6 years ago

I’ve only had one experience with making a claim with a credit card company regarding a bad purchase, but it was by no means a quick, sweet process. Fortunately it was work-related and not my personal card: one of my tasks at work is to do purchasing for several research groups at a university, and on one order the (small, internet) vendor took the money and took off, never sending the item. I immediately reported it both internally and to Bank of America. Throughout the process, BoA acted as if I were lying. I received several phone calls saying I… Read more »

Laura
Laura
6 years ago
Reply to  Laura

I forgot to add: the amount of the purchase in dispute was $150. Not exactly worth the level of effort BoA made to dispute my claim.

James
James
6 years ago

I agree that credit cards are not inherently evil. I also agree that cigarettes are not inherently evil. That said – claiming that you can use a credit card without paying lots of interest that negates any benefits or perks is like arguing that you can smoke cigarettes every day of your life and not get lung cancer. Of course you can. But statistically, we know people don’t. The reason I refuse to use credit cards is on principle – statistically, they ruin people’s financial lives. The perks are tainted by this fact whether or not I can “use them… Read more »

El Nerdo
El Nerdo
6 years ago
Reply to  James

Exactly! Just because inanimate objects are devoid of moral qualities it doesn’t follow that they cannot be generally terrible for the most people even if they are apparently beneficial for some individuals. According to stats on creditcard.com, roughly 2/3 of families with credit cards carry a balance. “Control” is great and all, but it has its limits.

JMV
JMV
6 years ago

I love that commercial where the ladies are having lunch and the one lady is telling about this guy she has been seeing and how they only go out to dinner. Her friend suggests he gets 2x points on his credit card and is using her. I LAUGH because why would you spend extra money on meals just to get a little back? I bet that marketing approach works with a lot of people out there! In my mind, I’m better off not spending the money in the first place.

Gyoung
Gyoung
6 years ago

Most of the comments seem to be focusing on the benefits of credit cards to consumers if used correctly as a tool. I think the idea of a credit card as a tool is correct, and that the tool is neither good nor bad, but if think it also misses the point. From the following nyt article http://www.nytimes.com/2009/05/19/business/19credit.html?_r=0 “A 2005 report by the Government Accountability Office estimated that 70 percent of card issuers’ revenue came from interest charges” Now think about that for a minute. the credit card industry is relying off of people getting stuck in interest paying situations… Read more »

Liz
Liz
6 years ago

I declared bankruptcy two years ago, and I will most likely never use credit cards again. Even now, every pay period I have things come up where I know it would be wrong, but I absolutely know that if I had a credit card I would use it to cover the shortfall – even with all I have learned and my deep desire to not have credit card debt. And even if I do feel, in a few years, that I have finally gotten to a place where I actually have enough money in a month that I’m not consistently… Read more »

Jason
Jason
6 years ago

Interesting thoughts about how the perks are paid for by interest charged to overspending consumers. There is an alternative available in charge cards, which require the full balance to be paid every month. This has long been American Express’ distinguishing factor. This way you could receive many of the benefits without implicitly profiting from others’ irresponsible behavior.

Anonymous
Anonymous
6 years ago

I still have a problem with this argument that they are not evil because it is still a system which values money over people. A system which values people over money would be designed so that it is essentially impossible for people to go into debt. And it is possible to offer things like travel insurance without a credit card.

Bye Bye Debt collectors
Bye Bye Debt collectors
6 years ago

Thanks for your post! So many people think that credit cards are evil, but I disagree. The rewards are awesome and if you know how to use them to your advantage, then why not? I wish everything can be paid through credit cards so that we can gain more points and more rewards 🙂

Caryl Anne
Caryl Anne
6 years ago

This is a great post! I agree that credit cards aren’t evil, but they do need to be used responsibly. If they aren’t, this could lead people to think they are evil with late fees, charges, etc. Thanks so much for sharing!

Grant
Grant
5 years ago

Yes its possible to use a credit card safely. Just like its (safe) to have protected sex with multiple partners picked up at a scraggly/high end bar week after week and hope to not catch something. The longer one plays the greater the chance of a problem developing. Life has many things that on the surface look enticing yet the hook is somewhere in the bait. Be frugal be diligent (Save). Do not waste when in a season of abundance cause that valley may be just around the bend. Credit is by definition self enslavement to the lender and you… Read more »

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