How I Ended My Love Affair With the Credit Card (and Why I Use Cash)

Anonymous Says:

February 21st, 2007, 23:06 pm

I like this idea, but how do you handle hotels and car rentals?

Leo Says:

February 21st, 2007, 23:30 pm

Well, basically, I don’t really use hotels and car rentals. For reasons of frugality, I haven’t traveled much in recent years. I do plan to travel in the future, though, so here’s what I recommend:

1) it’s not as common, but you can find hotels and car rentals that will make other arrangements; it may take some phone calls though.
2) try staying with a friend, relative, or someone else you know; they may even let you borrow a car if you offer to pay.
3) you might need to get a credit card to use only on these occasions; i recommend literally freezing it in a ziploc filled with water (perhaps wrapped so you can’t read the credit card number through the ice), and only defrosting the card when you’re going to travel. even then, don’t use it for other purchases.

Leah Says:

February 22nd, 2007, 7:11 am

Here’s an idea with online payments — sell stuff on ebay, and use just that money via paypal to pay for things online. Last year, I went on a huge ebay binge, and I saved up quite a bit in paypal. It’s my “fun money” to do whatever I want with (since I didn’t really need the money for bills or anything, I needed some way to motivate myself to get rid of the clutter).

As for the motel, many places accept cash, but there is sometimes a caveat. I worked at a motel for awhile, and we would accept cash only with either a CC# or $100 extra deposit (so, pay for room upfront plus $100). When you checked out the next morning and we briefly looked the room over, we gave back the deposit. I don’t remember ever keeping it, since it was only for major damage issues.

I use my CC regularly, but I do pay it off each and every single month. Then again, I’m not an impulse buyer. My bill is a touch higher than I’d like, but much of it is groceries/gas. I’m working on reducing the small bits of discretionary spending that add up over time on that bill.

Josh Says:

February 22nd, 2007, 8:01 am

I’m also working on paying off all of my cards, although most of the balance on these is medical expenses.

I don’t know if I could do without my Visa-backed debit card. I don’t particularly like carrying or using cash, especially because cash tends to slip through my fingers. With my card, I have a paper trail (through my bank) that tells me how much I spent and where. Of course, this could be remedied with a budget, but I’ve never really needed a budget because I’m not a big day-to-day spender.

Good post.

Anonymous Says:

February 22nd, 2007, 9:07 am

I agree that credit cards are a plague. However, I use a rewards (airline)card for every purchase so I can obtain miles for every purchase. I pay all of the purchases off on Friday and basically think of it as my checking account. I know that temptation is there, but discipline and fear prevent me from going over what I can cover with cash. The miles have provided my wife and I with great vacations which we would have never taken otherwise.
-TJS

DEBTective Says:

February 22nd, 2007, 10:24 am

Great job, baby … great post. Thanks for spreading the word about ditching credit cards and deep-sixing the debt that comes with them. When you’re not throwing away dough at 18 percent interest, you have a thing called money. Way to go, jack! Let’s get the word out! http://www.debtective.com

Leo Says:

February 22nd, 2007, 14:42 pm

@leah: I love the ebay idea … although knowing me, I would probably just use the money I made to pay off more debt. :) I think that if the credit card works for you, that’s great … it takes a lot of discipline. It doesn’t work for the rest of us. My only caution is to not use it on something that you can’t pay off at the end of the month — perhaps a large purchase over a certain amount of money. But you seem good at that already — and congrats on reducing discretionary spending.

Leo Says:

February 22nd, 2007, 14:47 pm

@josh: congrats on paying down your credit cards. It’s a tough journey for some of us, but a necessary one. As for the Visa debit card, I suggest examining your spending on it … if there are a lot of discretionary spending, and you would like to cut back on spending (to save or invest), perhaps try doing without the debit card for a week and see if anything changes. It might make a big difference (it did with me).

Leo Says:

February 22nd, 2007, 14:48 pm

@TJS: like I said, if it works for you, then go for it. However, not everybody has the discipline not to spend more than they can pay, when it’s so easy — and the problem comes when something urgent comes up and you don’t have the money to pay for it. Which is why I’m developing an emergency fund now (instead of using the credit card as a backup). Congrats on the vacations!

Leo Says:

February 22nd, 2007, 14:50 pm

@Debtective: you’re right on about the 18 percent interest (some go lower, but it’s still high). I actually meant to list all the things I don’t like about credit cards, but the post was getting long already.

The Digerati Life Says:

February 23rd, 2007, 0:16 am

Thanks for mentioning my post on this even though it’s a different view! Great post, I enjoyed it!

dee-q Says:

March 9th, 2007, 13:07 pm

It’s true. Credit cards can greatly affect not only your financial status but your entire life as well, if not managed properly.

An advice to those people with bad debts, you can start rebuilding your credit.

Some people start rebuilding their poor credit scores by getting
bad credit creditcards.

Here’s a list of lenders who approves cards for bad credit.

I hope these resources be helpful to you and your readers.

Larry Says:

March 19th, 2007, 16:28 pm

Dude, this is kind of nonsense. If you have problems with your money simply stop spending. Credit cards/online purchases simply make the life easier.

vdovault Says:

March 19th, 2007, 17:19 pm

Leo you can get one of those preloaded credit cards (Visa and MasterCard both have them) at the mall or the grocery store (or maybe at your bank) if you need to shop online. They’re not perfect but they’ve got some definite advantages over a regular old credit card or a debit card.

The good thing about them is that they’re pretty safe especially if you worry about being hacked…Google “vladuz and ebaY” to see why I wouldn’t to use a regular credit card to shop online, much less sign up for PayPal…too much sensitive financial information and no guarantees that PayPal/ebaY will protect you if they get hacked. You can go to their websites and keep track of your balances. Some of them are reloadable and some aren’t…you have to decide which makes more sense for your purposes.

The bad news is the fee ($2.00 - $10.00 in my area depending on from whom you buy the card and reloadable cards tend to cost more) and possibly the limit (the biggest one I know of you can only put $500.00 on it) might not be enough for someone doing a trip and needing to make a car rental reservation and a hotel rental reservation. But since like you I rarely travel, they work great for my online shopping needs and I don’t have to get a friend or relative to buy online for me and then pay them.

zenhabits Says:

March 19th, 2007, 19:35 pm

@Larry: Well, I wouldn’t say it’s nonsense. I’m one of millions who have problems with credit cards. It’s the No. 1 reason many people have financial problems. Credit cards/online purchases make life easier by making *buying* easier. And making buying easier isn’t a good thing if you’re trying to control it.

Thanks for your input, Larry … let me reiterate that you should do what works for you. Credit cards don’t work for me.

zenhabits Says:

March 19th, 2007, 19:38 pm

@vdovault: Thanks for the great suggestion. It’s something to keep in mind. But really, I don’t mind not being able to easily make online purchases anymore. It turns out that it’s not an inconvenience for me at all — and it’s saved me a lot of money! But if I really need to buy something online in the future, I’ll consider the pre-loaded card. It’s an interesting solution.

star Says:

April 11th, 2007, 5:25 am

I see this kind of advice often and cringe every time I read “cut up your cards”.

Instead, why not just learn to have discipline in your spending? Don’t live above your means. Don’t spend anymore through cards than you would through cash. It’s such a simple concept that I can’t understand why nobody ever gives this advice in lieu of “cut up your cards”.

In return, you can take advantage of cash-back rewards and other types of rewards that have monetary value. You will also be building a credit profile and score.

Do you realize that in many states your insurance premiums are determined by your credit score? So is every loan you will likely take out for a home or vehicle sometime in your life. Even many employers check credit reports before they make a decision.

I run every bill and expense I can through my credit cards. Since I pay the cards in full every month, I pay no interest whatsoever. I am averaging $1000 a year in cash-back and other rewards from using my card.

Every time I buy groceries I am getting 5% cash back. The same goes for all my gasoline purchases. Everything else I am getting 1-3% back.

Even though I have over $100k in available credit on my cards, I have no credit card debt at all. I am not tempted to spend above my means whatsoever because of my cards. It’s not hard. It just takes a little common sense and discipline.

Stop looking at credit cards as a way to get into debt. That’s on the person, not the cards. Credit is a valuable tool that if used properly can provide income through rewards and even investing.

Because of my credit profile and score, I routinely get offers of balance transfers @ 0%-4%. I can pull out this money, put it in my 5% APR savings account and earn interest at no cost to me whatsoever. Plus, just using your cards for all your expenses lets your money sit in the bank drawing interest for nearly a month while the balance floats on the card.

Some people think living frugal and credit cards don’t mix. I say they are wrong and they are throwing money away by not taking advantage of cash-back rewards.

Leo Says:

April 11th, 2007, 6:46 am

star … Interesting take, but consider this: cash-back rewards are gimmicks to trick people into getting into debt. And it works, because the credit card companies make millions off our interest payments, even after giving out the rewards. It’s a reward for spending — exactly the kind of behavior that frugality discourages. Reward yourself for not spending instead! :)

Trust me, I do hear what you’re saying. Credit cards can be a good tool, if you are good at paying off your balance each month, and not spending beyond your budget. However, credit cards also make it too easy to overspend, to buy on impulse, and to get in over your head. Which is why I am an advocate for *most* people (not all) to get rid of their cards. But if it works for you, go for it!

Marc Says:

April 25th, 2007, 14:13 pm

Leo, I love your site!! and am glad to have found it.

Sorry, but I agree with star and other posters that some of us can use a credit card with discipline (and I think more of us should be able to do so) and we find the credit card very useful and not the bad thing it is often portrayed to be. My wife and I use our VISA for regular expenses such as groceries, gas and home improvement items. And pay off the balance each month, as we ensure that we do not spend more than we earn. However in the case where we do need to spend a bit more than our monthly budget, we also have the option of paying off the bill using our home’s line of credit. And at 6% interest it’s a lot better than the 18-20% VISA will charge us. However if it happens that we do have to pay our bill from our line of credit this is an indication to us to spend less the following month.

Yes, credit cards allow you to spend money you don’t have (if you are not as disciplined as we are), which is their danger. Partly at fault of course are the credit card companies, who regularly increase your credit limit so that you can spend past your means. I believe you can always ask for your credit limit to be reduced to guard against overspending. And only have one card - more cards make it harder to keep track of what the balance is on each.

One argument against using cash for daily purchases is safety. I’d rather have my wife use our credit card or debit card than having to carry around several hundred dollars worth of cash. Yes, a stolen credit card can also be used, but not as easily as cash and at least such unauthorized transactions are usually covered by the card-issuer especially if you report the stolen card right away.

Leo Says:

April 25th, 2007, 18:52 pm

Hi Marc … I’m glad you like the site! I hear what you’re saying, and like I’ve said earlier, if you can handle a card responsibly, and you feel that it’s a benefit, go for it. But for a lot of people, it’s a danger.

Consider this: in our grandparent’s generation, there were no credit cards … people saved money for purchases, and their finances were much better then. Then, in the 1980s, credit cards became the rage, and people got into massive debt, and became bankrupt at a higher rate than ever before, and stopped saving. With this historical perspective, you can see that credit cards might work for some people, but as a whole they have not been a good thing for most.

Debt Settlement Advice Says:

April 26th, 2007, 21:25 pm

Carrying bad revolving credit card debt is going to completely kill anyone’s chance of building wealth for their future. Paying hundreds each month to a rediculous interest rate is just financial death. Everyone spread the word. America is in such a debt crisis and it needs to be turned around.

David Silver Says:

May 5th, 2007, 20:04 pm

Amen! — Great article. One thing I’ve found recently is PaidByCash. It’s a one-time debit card for any amoutn you hav — thouh paid for in cash. Helps me wih my spending. It’s available very close to me, and it’s cheap AND I don’t hav t tie my bank account to it like PayPal.

Spiffy Says:

May 22nd, 2007, 16:43 pm

Congrats on getting your credit undercontrol… I am like you… My parents had credit cards and they put a lot of my college on them. They refinanced their house to pay them off and just have a higher house payment. I didn’t get my first card until I got my first job out of college. I knew people in college that had them and were making “mistakes” with them and I didn’t want to be that person.

One thing lead to another and I got my first credit card. It had either a $300 or $500 credit limit. I kept it under control until I moved out on my own. I was working a crap job after college, because it’s hard to find that professional job these days. I wasn’t make much money, but wanted to move on with my life like the rest of the world. I would basically use the card to purchase food, gas, clothes, toilet paper, cleaning supplies, you get the picture.

Things just racked up when rent went up. I should have went home, but I didn’t want to live with my parents anymore. I thought I could be financially stable on my own, which was my mistake. I got a better job, but then I thught I could blow my extra job money on other things like going out, because I started doing the whole bar scene… I should have been using it to reduce the credit card debit. Instead, I got another card.

I just took control of everything this year. I had to have assistance. It was going to be impossible for me to pay back what I owed at 32 and 22 percent… Credit card companies are evil… I refuse to get in a situation like I was in. I am working my way out of it thanks to my grandfather, but I am more money minded now.

Steve Robbins Says:

May 23rd, 2007, 9:43 am

Your strategy is a little like telling a baby, “You can’t walk without falling and hurting yourself? Just don’t walk and either let people carry you around forever or crawl everywhere.” That would work as long as you just want to get around the house. But eventually you’ll need and want more.

All the energy you are wasting with a cumbersome and unsafe cash system could be expended in learning to manage your financial life in a responsible manner. Walking around with a checkbook is one of the most dangerous things you can do. If it is stolen and the thief bounces checks the cops put YOU in jail. Cash gets people killed every day. If it is stolen, you are out of luck. A properly handled credit card (not a debit card!) is your best financial defense and could at some point be the difference between being in jail or dead or smiling. Use your energy and skill for the greatest good. Use your fear to motivate you to right decisions.

Learn to walk, or you’ll be able to leave the house. And imagine the fun of learning you can even run without hurting yourself!

Steve Robbins Says:

May 23rd, 2007, 9:45 am

Note to self: learn to proofread or you’ll never be able to leave the house. lol

Leo Says:

May 23rd, 2007, 20:40 pm

Hi Steve … I hear what you’re saying, but I don’t see it that way. What I’m telling people is to not spend what they don’t have. I don’t see anything wrong with that.

Also, I find my cash system to be very simple and easy, and no more dangerous than credit cards — less so, actually. And it’s not cash that gets people killed — if you are mugged, it’s not because someone knew you had cash in your pocket. You’ll get mugged no matter what you’re carrying.

I don’t really see what’s wrong with my simple system. It works very well for me. My cash hasn’t been stolen yet, while credit cards are ripped off all the time. Yes, you can get your credit back, but it’s a huge hassle.

Robert Says:

May 25th, 2007, 19:20 pm

I hate to say it, but I find it amusing that your ads in the ’sponsors’ section, are hawking credit cards. I understand that they are ‘google ads’ and thus tailored to your article, but it’s funny that they are essentially countering your entire point.

“This article about how to cut up your credit cards, brought to you by ‘Instant Credit Cards!’ ” just makes me really laugh.

Anyhoo, while I do see where you are coming from, I have to agree with what some of the others are saying. Your attempts to reverse and control your spending are good ’short term’ goals and habits. But long term, the goal should be “I can manage my finances” and not “This imaginary line in the sand will keep me from being irresponsible”.

I really hope you see the difference between the two, for long term growth in your life and well being.

Btw, first time on the site, read several of your articles, and I do find good info. Just keep in mind your audience is more than just you. ;)

Crystal Says:

June 2nd, 2007, 10:15 am

I just came across this article by accident, but after reading it, I’m having a lot of trouble understanding how any of the posters could possibly think that following the advice in this article is a bad thing.

Credit card companies are nefarious businesses that purposely prey on those who either don’t know any better or cannot survive without them. They lure unsuspecting people into acquiring and using them with unscrupulous target marketing, and they ruin so many people’s lives in the process. Yet they refuse to take any responsibility for their contributions to the debt problem in this country.

The way they ruthlessly seek out the very people who lack the education to understand how the system works is criminal. If you don’t agree with any of these statements, obviously you’ve been lucky enough in your life to have grown up in a higher-income family and/or were taught to stay away from credit from early in your childhood.

Some families with only one parent and/or low income simply could not eat without credit cards, and the credit card companies know this all too well, so they use agregious tactics to accumulate more customers, and they create money out of nothing. They are doing no service to humanity; they are producing nothing of value in the world. They are not curing disseases, they are not inventing technology, they are not educating our youth, and they are not growing food to feed the world. They have no useful benefit in society.

While I agree that debit cards and online accounts such as Paypal are useful (they are the only thing I use; I haven’t had a credit card in nearly ten years), any credit accounts (except mortgage and student) should be avoided like the plague. In fact, I think the world would be a better place overall if Visa and Mastercard transitioned their businesses into solely debit-card models.

I’m sorry, but I cannot in good conscience do what some of these posters are doing: saying that it’s OK to take advantage of people because they need to learn lessons or it’s their own fault they’re not as smart as you. It’s just wrong. That’s like saying that sweat shops provide beneficial services to humanity. It’s like saying that it’s OK to abuse those who are weaker than you are, like the disabled or children or animals. There’s something very wrong with the moral ethic in the world when the majority only look out for themselves and are indifferent to how their actions and attitudes are affecting the world around them. It’s like the pollution-creating industries who think they have no moral responsibility to clean up after themselves, or the people who think that murdering a half-million innocent civilians is an acceptable end that justifies the means.

Sure, people should be responsible with their finances. But what about kids who grew up in low-income families who saw credit cards as a regular part of daily life? Is it their fault they had the unfortunate luck to be born without a silver spoon? Should they have to suffer for 10-20 years of their young adult life because of mistakes they had nothing to do with making? Should those without access to education be preyed upon and indebted into lifelong servitude because the credit card companies used marketing lingo to hook them rather than unbiased factual information?

The whole system of credit acquisition and credit reporting in this country is seriously messed up. The only people who don’t think so are the rich.

For the first four years of my adulthood, I had perfect credit. They were throwing the cards at me like crazy. I grew up watching my mother use them for almost everything, even groceries. I was mocked and ridiculed as a child whenever I showed up to school with something that wasn’t the “right” brand, especially when it was homemade by my grandmother, who happened to be an accomplished seamstress. I endured years of emotional torture from mean-spirited kids whose parents bought them everything their heart desired. To help minimize my suffering, my mother did as much as she could, sometimes allowing me to have things that might help me to get through the day unnoticed (which obviously meant spending more to get something socially acceptable in my town). Once I got to college, it was second nature for me to think of credit cards as “money in the bank.” It’s just like any other form of indoctrination, and when children have learned things from a young age, it’s hardly their fault when they falter before they even get out of the gate.

Anyway, I had perfect credit for four years, and the companies were sending me credit cards left and right and raising the limits to astronomical levels. At one point, I had limits as high as $5,000 per card – at 19-20 years old! I dare anyone to stick up for the credit card companies for such predatory behavior. I’ve even heard of credit cards being issued to children and family pets! I was even issued a store credit card when I was 16 (without my mother’s signature or approval). It’s ridiculous. There’s no accountability in the industry, and there never will be as long as we give them free reign to do as they please without forcing their hand. They have no morality whatsoever. My mother also worked for years in collections for a very large bank as it’s the only job her (lack of) higher education could get her – but they didn’t pay her enough for her to be able to stay out of debt!

After college I got some roommates, all of them claiming to have bad credit, so naturally all of the bills were in my name. HUGE MISTAKE! Within six months, my debt was out of control (none of the roommates ever paid for anything, and they were racking up $200-300/month telephone bills among other things). They were nice people and I trusted them; but they were more interested in partying and drinking and drugging and smoking and sleeping all day to party at night. I never once did any of that stuff; I never even drank on my 21st birthday, and I still don’t today at 30. I was once again ridiculed and mocked for being “immature” and “naive.”

Finally one day, I cancelled the telephone (and got reamed for it as if it was me who was being unreasonable), told the landlord that I was moving and that the other roommates would have to sign a lease themselves, and moved back home. At this point, I had many, many thousands of dollars in credit card debt – resulting from my having to pay bills that were in my name for services I didn’t use – forcing me to use credit cards for things like food and clothes. It didn’t help that at the time I was living in the most expensive city in the country. Once I got back to my family (thousands of miles a way), they basically forced me to file bankruptcy – they said it was the only option at this point – they didn’t have the money to help me, and they said I’d never in a million years get out from under it. So I did, and I’ve been paying for it for nearly a decade now. I’ve even had creditors whose bills were discharged in the bankruptcy continue to try tricking me into thinking I still had to pay them, and one even had the nerve to file a judgment in another state without even notifying me, and I only found out the judgment existed this year, and it will be sitting there on my credit report for at least another 4-5 years because they waited until 4-5 years after the bankruptcy discharge to file the judgment. These companies have billions and billions of dollars, yet they insist on bullying poor young students and others, and they see nothing wrong with what they’re doing. The system is stacked in favor of banking corporations instead of people.

Add that to the fact that student loan debts are so outrageous for most people once they graduate that they’ll be paying on them for most of their lives, and you’ve got millions of people stuck on the hamster wheel for decades and left without any money for retirement. Yet, these banks keep on coming. They keep on accumulating interest on these debts, even for people who DID learn their lesson. It’s designed to keep the little guys down so the big guys can keep getting fatter.

The only debt I have now is my consolidated government student loan. I refuse to own or use credit cards of any kind; I will not encourage these companies to continue their deceptive practices. I vote with my money; I will not do business with any company that takes advantage of people. At this point, I could care less about my credit report; because I live on only the money I have in the bank, my credit report really doesn’t affect my daily life anymore; I’ve removed myself from having to care. Believe it or not people, it’s IS possible to live life WITHOUT credit! The credit myth is perpetrated by those who benefit from your debt – it’s an artificial system that everyone should avoid. If I ever have a credit card again, it will be ONE card with little-to-no interest, and it will stay locked up in case of emergency – true emergency like airfare in case of family death or something.

I could say so much more about this subject, but I doubt anybody will want to read what I’ve already written. Just remember, your net worth is not the most important thing in the world that trumps what you’re doing to anyone else – your actions DO affect the world around you whether you want to think so or not – taking advantage of people just because you can is just wrong.

Colin Says:

July 5th, 2007, 1:18 am

First, I’d say don’t cancel credit cards if you can’t handle them. Cut them up and leave the account open. Second, you need credit accounts to build good history in order to apply for a mortgage or get an auto lease, so these are necessary stepping stones unless you’re a millionaire that doesn’t need credit.

I agree that people need to be more responsible with credit cards, but they also need to understand how they work, and why you shouldn’t make rash decisions with them.

Chris Says:

July 12th, 2007, 12:03 pm

Leo,
Ahhh …. I found the primary page where you’re discussing this (I posted something on another page, regarding my feeling on credit cards).

Yours’ is one reason that I’m going to teach my children about credit cards early on in their life.
 
Credit cards are not bad in their own right, it’s the misuse or misunderstanding of their use that leads to problems with credit cards. Kind of like the misuse of alcohol by an alcoholic (although that can definitely be both a mental and physical addiction).

We recently returned $33,000+ to one of our lenders. Why one might ask (aside from not having the bill).
We borrowed $34,000 at a fixed rate of 1.9% for 1 year. We sent the full amount into our savings account (EmigrantDirect), earning 5.05%. When the bill needed to be paid, we simply made sure to transfer money from savings to checking, and paid the minimum monthly payment, without spending any of it on anything else.
Earning $90/month on average wasn’t that bad.

I would not suggest doing this, to someone like yourself.

Bob Says:

July 25th, 2007, 17:38 pm

Leo Wrote: “I don’t really see what’s wrong with my simple system. It works very well for me.”

There isn’t a darn thing wrong with your system.
I’ve avoided such debt all my life (after I wised up) and that behavior allowed me to retire at age 42.
Of course, I don’t have any airline points, but… :-)

obed Says:

July 30th, 2007, 8:45 am

i am applying 4 a credit cards

Monica Says:

August 6th, 2007, 2:45 am

Credit cards can actually be a means to save money. First of all, even if you pay your balance in full every month, you still get whatever rewards are offered for using that card. And while not exactly saving you money when you absolutely must carry a balance, cards can provide temporary protection against the terrible things that can happen when cash is needed immediately. Aside from the fact that such need may be due to some unexpected emergency, this protection is useful for psychological reasons, such as avoiding excessive worries about finances. With a credit card, one will never have to starve until the next pay, or lack money for an urgent trip to see one’s dying grandmother. It’s just that this protection should not be abused, as it comes at a price, if it is not possible to pay the balance in full.

Within a reasonable budget, credit cards can actually save money and simplify money management. That’s because many banks charge huge fees for each NSF cheque (or debit card transaction that was accepted despite the facts that the funds were not sufficient). Or, funds may be deemed insufficient even when the money is there, having been deposited, but it is not available yet.

That can happen not only when a deposit was simply not processed yet. Banks would actually place a hold on people’s funds and then charge NSF fees even though the money is there. And if there are several cheques or debit card transactions (no, debit card transactions are no longer automatically refused if there is no money), the bank may accept the largest transaction and then charge NSF fees several times (for all, or most, of the other transactions). Or, with a credit card, one can simply charge everything without incurring any NSF fees and pay the bill in full by the time the bank makes the funds available to their rightful owner. Credit card issuers would also list purchases and totals, saving the cardholder the trouble of doing so.

Kerry Says:

August 22nd, 2007, 8:15 am

Leo, I agree with you!! I know some don’t, and I think you applauded the ones who can manage their financial life with credit and debit cards. For those like me, it’s horrible. It’s like asking a recovering alcoholic to try to manage his drinking versus, going cold turkey and learning how to manage his mental state. Thanks Leo!!

Jesse Says:

August 28th, 2007, 15:12 pm

I agree with Leo here, this doesn’t apply to everyone, but it IS good advice - and not just for those who can’t handle credit cards.

We’re slowly paying off OUR credit cards, and are not using them (my husband and I switched cards and keep eachothers’ cards in safe places so we won’t be tempted!)

HOWEVER, my grandparents don’t use credit cards, don’t use debit cards, don’t smoke, don’t drink (much), don’t have cell phones, computers, online banking, email. They live fairly frugally by growing a garden, canning, and using the clothesline in the warm weather (they live in Missouri). While they would never say that they’ve ALWAYS made good money decisions, they’ve definitely OFTEN made good money decisions. They’re financially sound, have placed money aside for when that day comes that they pass on, and have generally tried to make their burden non-existent for the rest of the family. And they are DEFINITELY not boring!

THEY are my goal, now, and my example, and as my husband’s grandparents live the same way, this is also HIS example as well. We are slowly working our way there now, after some bad experiences in our own past with money. But I think that this site is brilliant, and I hope that - regardless of whether the article applies to you or not - you can see the wisdom in what he’s saying.

Autumn Says:

January 1st, 2008, 3:20 am

Another thing you could do for online buying (if the need arises) is get one of those prepaid cards (I think Visa and Mastercard sell them). Then, if you have money left over on it, you can use it for other purchases (gas, groceries, shopping, etc.).

Myself Says:

February 4th, 2008, 13:00 pm

So, what you’re saying Crystal, is that because people see their parents screw up, that they will end up like them.
I can wholeheartedly disagree.

Also, that YOUR choice to use the CC to pay for YOUR mistake of taking on roomates who took advantage of YOU is in reality the CC companies fault. Bullsh*t! “Good people” don’t take advantage of someone.

After I declared bankruptcy (some 14 years ago), I finally started assessing where the problem was. It was MY inability to control my spending and living within MY means. It was NOT the fault of the CC company!

Some people cannot control their spending. Because they choose not to. That even goes for Leo.
He recognizes that he can’t control his spending if he has a credit card, thus abstinance from credit card use is what works for him.

Trust me, there are PLENTY of things that I want. But PLENTY of things that I don’t buy, simply because I know that unless I can buy it using cash, I will not buy it. Now, under my terms of “buy it using cash”, 0% interest for N years, is the same as buying it using cash.

I also admit that some people end up on hard times (i.e. medical, etc.). However, putting things on credit at times like this is usually (though not always), NOT in their best interest. But likewise, I also can’t feel sorry for someone who comes down with lung cancer, and is confused by the fact that they smoked since they were 13 “may have had something to do with it”.

As Leo said in this article. You should do what works for you. But likewise, just because it doesn’t work for you to use credit cards, doesn’t mean that it can’t work for someone else.

Complete disclosure: We use our CC just like one of the other posters does, only for items that we know will be paid in full when the bill arrives. That provides us with an additional $600+ every year without changing our planned spending a single bit.

Stacy Says:

March 17th, 2008, 12:52 pm

I agree with Crystal. Go to any college campus on orientation day, and look at all the credit card companies giving away t-shirts, hats, keychains, etc. just for filling out an application. Then take an 18 year old who has never paid a bill in their LIFE and say - now, son, don’t spend money you don’t have!! Ridiculous. The combination of immaturity, no job, 23% interest and penalties is LETHAL.

Kids have no concept of the consequences of a running balance. If your life experience has sheltered you from seeing anyone in debt or struggle to make ends meet - then hey, putting that Chinese food on the credit card because you spent your cash for the month already seems like a decent idea at the time.

Then when the bill comes and it goes to the bottom of a pile of papers because you are cramming for a mid-term, and the next month you are getting late fees and interest and finance charges… so it can really spiral out of control rather quickly.

Credit should not be given to people who are not old enough to drink a beer!!

And even then - we need to educate young people about how to use credit to their advantage and how to manage their finances.

Parents don’t teach their kids about money, then somehow expect them to just glean this knowledge from the air and make life changing decisions without any clue. It is the responsibility of the parents to make sure their kids *practice* spending and saving, and learn good habits for life, not just observe you and hope they got the message. I don’t want my kids to have to go through the depression and frustration of being in debt like I did.

unsecured personal loans is difficult. However, there are still networks of lenders providing bad credit loans Says:

March 19th, 2008, 7:46 am

Today’s credit crunch is a serious problem for anyone looking to get approved for any type of loan or credit. Getting out of debt can be even more dauniting now as a result.

Choice Personal Loans Says:

March 19th, 2008, 7:48 am

Woops scratch that last comment.

Today’s credit crunch is a serious problem for anyone looking to get approved for any type of loan or credit. Getting out of debt can be even more dauniting now as a result.

katie Says:

April 10th, 2008, 23:42 pm

i want to thank you for encouraging me to just cut up my credit card. you are so right about how it makes buying things too easy.. i would say over 50% of items i used my card for were on the internet.. impulse items. thank you so much for helping me take this step to get out of debt!!