Why I Love My Credit Card
If you're read my site for a while you may be a bit surprised to find out that I actually do use a credit card. I'm usually the one that's first to tell people that they shouldn't use credit, and that they should save up for things that they buy.
While I do believe you should save up for the things you buy, I also believe that sometimes it's ok to take advantage of a good thing when you can. If you can get cash back rewards for things you're buying anyway, why not do it? You just need to keep in mind that the credit card companies are not your friend, and don't really want to help you. You need to go in with a wary and skeptical eye. You need to know what you're signing up for – and if you do get a rewards card, make sure that you actually use the rewards. Almost 41 percent of people with rewards cards NEVER use the reward!
More than 41 percent of reward cardholders either rarely or never even bother to use their rewards, said a 2006 survey by GMAC Mortgage and Harris Interactive.
With that in mind my wife and I do have one credit card that we use, the Chase Freedom Cash Rewards card. We use it for things like groceries, gas and in some cases for high ticket items like vacations or electronics that we purchase. Whenever we use the card we only buy what we have the cash to pay for right away – and when we get the bill – we pay it in full. We NEVER carry a balance on the card because that can quickly negate any rewards that you're receiving.
Some of the benefits we love from our cash rewards card?
- We get a couple hundred dollars in cash back every year, while paying no fees. (never sign up for one of those cards with an annual fee!)
- We get extra perks with the card, things like extra warranty protection on the things we buy, travel insurance, price protection, theft protection, fraud protection and roadside assistance.
- Anti-fraud protection – and zero liability for purchases illegally made with our card.
Why I Hate My Credit Card
If you're read my site for a while you know that I'm not a huge fan of the credit card companies mainly because of their anti-consumer friendly behavior over the years. They like to charge fees for no good reason, jack up interest rates for those who can least afford it, and pretend to be on your side when all they're really trying to do is get you into more debt. When you finally can no longer pay many of them will engage in downright illegal behavior.
When McDonald’s started taking credit cards for purchases, the average purchase went from $4.50 up to $7.00!
Because they're so shady – I would NEVER suggest using a credit card if you're in debt, or if you've got a spending problem. In those cases you're better off to just cut up the cards. For those who are able to spend responsibly only on things they need, I think it's ok to use credit if you're extremely careful.
So with that said, here are some of the main reasons I hate credit cards in general, and my own one specifically.
- When spending on a credit card, people tend to spend 12-18% more. The reason? Spending cash hurts more.
- When you use a credit card you are subject to the credit card company's whims – especially when you carry a balance. They can raise your rates whenever they want!
- They always try to pretend that they're looking out for your best interests when in fact they really just want you to carry a higher balance.
- They encourage irresponsible spending by promoting a culture that says “things can make you happy”.
So those are a few of the reasons why I'm extremely wary when I use credit cards. If you're not careful, they will get you -and you'll end up paying more than you thought. If you're a responsible spender, however – there are some benefits to be had by using credit. Just make sure you're not falling prey to the consumer mindset and end up spending for things you don't need.
Do you love or hate your credit card? Give us the reasons why you do in the comments!