Yes, I use credit cards.

Credit Cards Aren't Evil

I hope I don't get blacklisted from the personal finance community for writing this, but I have to confess: I use credit cards.  And I am not ashamed of it. 

Now before you start leaving me nasty comments about how credit cards cost you money in fees, cause you to overspend, cause you to go into debt and lose your home and car and dog to repossession, etc., read on. 

My Credit Card Situation

I only have one real credit card.  In fact, it is one of the best credit cards, in my opinion.  It is a Chase Freedom Mastercard.  It offers some great rewards/rebates, which is why I use it.  (Regular readers know I have recently gotten pissed off at Chase Bank for the last time, but I separate their credit card business into a different category than their banking services.)  95% of all my purchases are made with this card.  In addition to my Chase freedom Mastercard, I also have an ATM card that is tied to a major credit card label.  I only use this card for shopping at Aldi (they only take cash or ATM cards) and making transactions through the ATM at my bank.  But it is nice to know it can be used as a credit card if my main card becomes lost or stolen.  I carry very little cash, so if you have any designs on mugging me I am afraid you will be very disappointed!

My Credit Card Rules

Using a credit card works for me.  But, like most things, it is important for me to use it responsibly and follow some basic ground rules.  Here are my rules for using a credit card:
1.) Pay the card off in full each month.  This rule is non-negotiable for me.  I refuse to pay a penny in interest charges.  Ever.
2.) Use the card for convenience, not for a loan.  Any time I use my credit card I know that I have enough cash sitting in my bank to cover the purchase.  I use the card for my convenience.  I do not use the card as a loan or as a way of spending money I do not have.  If I don't have the cash to back up a purchase, i don't make it.  it is a simple rule that, sadly, many people don't follow.
3.) Weigh the pros and cons of each purchase.  Many people, including financial expert Dave Ramsey, believe that we spend more when we pay with a credit card.  This is because the money we are spending doesn't seem "real" to us when we pay with plastic.  Therefore, it is important you carefully weigh the pros and cons of making each and every purchase to be sure that you are not spending money frivolously.

Do you use a credit card?  Why or why not?  


QandADebt said...

I don't have as much discipline as you at this point. Credit cards are a big temptation for me personally but I think your rules are spot on as far as how to use credit wisely!

Michelle P said...

I use credit cards too, but I have never carried a balance.

John@MoneyPrinciple said...

It's up to you whether you use them, use them and pay them or even use them for the occasional big purchase and pay them off over a few months.

But it's not so much the cards as the banks behind them. In addition to any interest that you may end up paying if you don't pay the card every month in full, cards and banks also charge the retailer for the privilege of processing a card payment. That alone is quite a nice profit for some computer programmes, some hardware and the licence to operate. Nice one!

Pam at MoneyTrail said...

I have two credit cards that I use for most purchases. I always pay them off at the end of every month. I think the key is always using them for things that you know you can afford --- not as an easy loan. We also always choose the cash back rewards which knocks our balance down each month.

krantcents said...

I use credit cards exclusively. I earn frequent flier miles. I earn enough to fly business or first class overseas every other year. I pay my entire balance every month.

Miss T @ Prairie Eco-Thrifter said...

We put everything we can on our credit cards to get travel points. Then we pay them off in full each month. We use the points for our vacations. It works awesome.

Maggie said...

We follow your rules, but we have credit cards from 3 banks. We have a Discover Card via Sam's Club so we can get 5% back, though that works for the just the first $1500 spent at Sam's. After that you get back just 1%.

Neo @ NetWorthProtect said...

I am all for responsible credit card use! Like you, I pay my credit card in full every month and use the credit card mainly for cash flow timing purposes. Also, many people are down on reward programs, I love them. My Amex card spending has paid for many flights to exotic locations for me over the years and it has been totally worth it.

Jon - Free Money Wisdom said...

I think credit card usage is great--as long as you're responsible. I have a fantastic score and have milked the companies for all their worth. If you know how to do it you can often get free money but just spending what you already would have spent. I never pay interest and never pay it off late. Have C.C.'s are a win-win for me.

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