On the other hand, if $1,000 of medical bills will turn your entire life upside down and cost you lots of money, I’d rather have that $1,000 in a credit line then not be able to feed my family just from one freak incident. If I don’t have that backup savings, if I have used it up, or if I never planned for it, at least a line of credit might put food on the table until I pay off those other bills. If I really get problems, at least I have fed the family for as long as I could before going belly up.

I do see your point, but the main issue is that the majority of people misuse and abuse credit. Whether it is poor training or the fault of credit agencies that push cards on people starting on the Freshman year of college (even some high-school seniors), is immaterial. You can only blame one person for debt: The person who signs the paperwork. No one held a gun to their head and said “sign for this card and run up a huge debt, or we will go after your family next”.

I personally think more people need to take more responsibility with their own actions and not try to blame credit for “evil”. Many people would not be able to drive a car or live in a house without it. Entrepeneurs open new businesses with nothing but an idea and a line of credit, but they also have a business plan. With the privledge comes the responsibility. I don’t buy the “lemmings” rule about it being an issue because so many people follow. I think, a whole generation of spoiled people were raised to think “charge it, I’ll pay it later”, without worrying about the results of their actions. That is not the fault of the credit agencies, that is the fault of the irresponsible consumer who doesn’t know how to manage money.

And there’s no such thing as a free loan — it’s free for you, that time, but for many, it ends up being a very expensive loan. Let’s say I charge $1,000 on my card, knowing that I will get paid before the bill comes, and intending to pay it back right away. Free loan! But then an emergency comes up, and I have to use that money to fix my car or pay for a hospital bill. You might already be prepared for that, but for many people, this is an entirely realistic situation. Now they cannot pay the credit card bill, and in fact will be underwater trying to get back to the surface for many months before they can pay back that $1,000 purchase (with a lot of interest). That’s the danger of credit cards. A much smarter approach is to wait until you actually have the money, and pay in cash. No danger.

Thanks for your comments and tips, John K. I will admit that credit cards may work for you, but they don’t work for many others.

If I make an online purchase with my bank’s debit card and it is misused, I might never see that money again, but some credit cards offer a “guarantee” that you will never pay for “fraudulent charges”. I have one of these cards and use is only for online purchases.

What’s more, as long as I pay that charge off within the grace period, I pay no interest. It is like a 25-30 day loan for free.

Keeping a credit account open for long periods of time without using the credit can hurt you in the long run. Are you keeping a credit card with a high credit limit open just to improve your score, but paying $25-60 a year in an annual fee? If so, get a no-fee card and close that old one. If you do carry a balance from month to month, 30% interest adds up much faster than 8.5% Shop around for rates if you intend to carry a balance from month to month.

Finally, many credit card companies will close your account if you dont use them from time to time, so if nothing else, make a small charge on each card once or twice a year and pay it off in the same month.

Not using credit can be difficult, but I’m not sure what you mean by it being harmful or dangerous. Being deeply in debt has ruined many people’s financial lives … while being out of debt hasn’t been nearly as bad for most people. Maybe you could explain a bit more.