I Don’t Hate Credit Cards and You Shouldn’t Either
A fabulous reader left the following comment on Wednesday’s random post:
SM: When you had one of your posts about your credit card limits awhile back, I just about cringed. I knew that someday that they would start reducing your limits…now be prepared for the FICO reduction because your available credit is reduced. I know you did nothing to deserve the reduction, but that’s just the way they operate. It took about a year to see my FICO reduced because of the lack of credit cards. It dropped 30 points.
My response was too long for the comments so I decided to make a post out of it. I’m sure most of you knew I’d have a lot to say about this topic anyway. :-)
Your credit profile is not my credit profile. What affects you may not affect me. Here’s why:
Credit is a Privilege
My limit was not reduced because of some deceptive act by the credit card companies that you may think was inevitable. Having credit is not a right, it’s a privilege extended by corporations who are in business to earn a profit. My BofA credit limit reached $50k based on my income, credit score, heavy usage, and a very long business relationship. The latter two were severed a long time ago. Further, now that we’re in a recession, there’s a credit crunch. Banks are reducing their exposure and risk as a result of the changing environment. Basic business strategy. Whether I like it or not, it makes sense.
Credit Is Not a Lifeline
My major credit cards still have limits in the $25k-$40k range so I won’t lose sleep over a $50k limit being reduced to $25k. Yes, it annoys me, but I’m not concerned because it will have ZERO effect on my life. Although I use my credit cards frequently, I do not rely on them to live, I do not rely them for emergencies, nor do I ever carry a balance.
Understanding Credit Scoring
Your FICO credit score isn’t reduced ’soley’ by the reduction of a credit limit. Your FICO score is comprised of five elements, one of which is your utilization percentage (i.e. amount owed) and it makes up 30% of your FICO score. Util % is evaluated on each credit card and the aggregate total of all credit accounts. Revolving credit accounts carry more weight. I’ll try to explain.
Example #1: If you have a credit card limit of $1,000 and carry a $500 balance, your util % is 50% (500/1000). This is bad and severely affects your FICO score. However, as you pay off your balance, your util % will decrease and your FICO score will eventually increase.
Example #2: But let’s say you have a credit card limit of $1,000 with a $0 balance, your util % is 0% (0/1000). If that limit is reduced to $500 and you maintain a $0 balance, your util % is still 0% (0/500). Hence, little to no effect on your FICO score. And I say “little to no” because there are other factors involved.
Side Note: Even if you pay in full every month, the amount owed when the statement closes is reported to the credit bureaus as a “balance,” thus creating fluctuations in your FICO score.
Example #3: Another example but more applicable to my situation. When my BofA credit card limit was $50k, assuming I charged $5k for the month, my util % would be 10% (5000/50000). When my limit was reduced to $25k, if I still charged $5k every month, my util % would increase to 20% (5000/25000). Yes, this will affect my FICO score, but not significantly because 20% utilization is still in the optimum range (less than 30% is preferred).
Example #4: Can you imagine if my limit was reduced from $50k to $10k? Assuming my $5k/month charges remained the same, my util % would increase to 50% (5000/10000). This would definitely tank my FICO scores! Hence, one of many reasons I prefer higher limits. The higher the limit, the less impact it has on your util %. But regardless of my limit, I’m always aware of how often I use a specific card so I can keep the util % at less than 10%.
Manipulating the System
I monitor my accounts closely, always pay in full, and I know my statement closing dates as well as I know my own birthday. Sometimes I pay in full before the statement closes, sometimes after, or sometimes I strategize what I want reported to the bureaus if I’m planning to make a financial move that requires an optimum credit score.
Side Note: Keep in mind, I have no other debt, except a mortgage.
So going back to my example above. Now that my limit was reduced from $50k to $25k, if I still charged $5k/month but wanted my util % to stay at 10%, I could do one of the following:
- Find ways to reduce my expenses in half.
- Limit my charges on that card to $2.5k and charge the other $2.5k on another card.
- Charge my normal $5k, but pay off $2.5k BEFORE the statement closed. This way, the bank will only report the remaining $2.5k that shows on my statement.
Side Note: I only use the BofA card for its virtual number feature when making online purchase so I’m not concerned about its util % anyway.
If this occurred on a card that I use heavily and/or for large purchases, I would most likely choose the last option – pay off some of the balance before the statement closed. Further, my other limits are high enough that my aggregate util % is always less than 5%. So I am confident there will be no reduction in my FICO score. I understand how the system works and I can manipulate the reporting to my advantage.
Want Me to Prove It?
To prove there will be no impact, I can pull my scores in a month or two (after the implied affect takes place), compare them to the scores I pulled in January, and report it on the blog.
Single Ma on Hating Bank of America
The reader also said:
I am in the final days of getting rid of my BofA checking and savings. They never treated me badly, but they have treated too people I know badly. Now you are one of those folks on my hate BofA “because” list.
I don’t hate Bank of America because they reduced by credit limit. I hate Bank of America because of their poor customer service. I work hard for my money and I’d prefer to keep my reserves in a bank that values my business.
Single Ma on Hating Credit Cards
The reader’s final statement was:
I hate CC’s and have gotten rid of them from my life. I only hope that you, someday, will see the light and get rid of them also.
I don’t hate CC’s and will never get rid of them from my life. In fact, I love them! They help me budget, track my expenses, earn rewards and extra cash, etc. Why would I ever give up all of that? *scratching my head*
Most people ‘hate’ what they don’t understand. My BabyGirl hated Trig last year. After being tutored for 3.5 months, now she loves it and earned an A! I hated exercise all of my adult life. After having a trainer since March and learning the effects that specific foods and exercise have on my body, now I love it and feel great!
Single Ma on Needing to See the Light? LOL!
I’ve already seen the light because I understand how credit cards and credit scoring work. Do you? In my opinion, once you educate yourself about credit usage and how the credit scoring system works, you too will realize that credit cards aren’t bad, but people who abuse and misuse credit cards are irresponsible.
Editor’s Note: this post wasn’t an attack on the reader but intended to dispel the myths of credit cards and credit scoring.
This blog is a personal account of my journey to achieve financial freedom. If you like what you've read, feel free to subscribe via (feed reader) or (email) to follow along.
When I read that reader’s comment I suspected you would write a post to clear things up. Like you, I don’t hate credit cards, I love them – pay them in full each month and they are a great way to track my spending. Additionally, I love getting benefits (FF miles, cash back) for spending money on things I would buy anyway.
Oh and I do the same thing with my utilization percentage – that’s the beauty of having multiple cards in great standing, if I need to make a large purchase (like my refrigerator when I bought my house) I choose the card I want to use to keep my utilization % low if I’m concerned about my score at that time.
Great post!
Debt (leverage) itself is a tool. Credit cards are a form of leverage – what is supposed to be a very short term loan so that so that a greater rate of return can be secured elsewhere. Like any other business arrangement, it can have benefits for both parties if managed properly. The point is that they have a role.
Someone recently asked me what the interest rate is on my credit cards. I said that I did not know. She was surprised until I explained that I never carry a balance – as it is a very short term loan with an correspondingly relatively high interest rate- so the fluctuating interest rate is of no concern. Other aspects of the arrangement are of more importance to me (like rewards).
As a long time reader/lurker of your blog, I so totally agree with you. Credit cards aren’t bad. They’re really useful tools to make money, as I recently blogged: tttp://frugalogy.blogspot.com/2009/04/credit-cards-frugal-living.html Give my credit cards? No way! I make too much money off them. I don’t care/don’t know what’s the interest rate, but I do know my rewards points, redemption rates, etc., to maximize my credit card benefits. My mantra: pay in full. If you can’t afford it with your monthly salary, you can’t afford to buy it on a credit card either.
I hate how they look at the % util. I pay off the balance every month and i don’t like to keep a large line of credit open in case it gets stolen. I asked them to limit it to $5000. Well that makes me look irresponsible when i typically spend $2500/month.
What does your card being stolen have to do with your limit? If you report the theft within the appropriate amount of time, almost all credit cards have zero liability. Others are capped at $50.
Assuming you’re only charging what you can afford to pay with cash, you can pay off some (or all) of your balance before the statement closes. This will reduce your reported balance and your util %. [-SM]
I am the person on who’s comments this post was based on.
I am a single mom also (my daughter turned 16 in February), no debt but the house, $111K income and almost $30K in savings.
I, too, paid my credit cards off every month, from December 1994 until the last payment and cancellation, December 25, 2007. It took me 8 years to get to pay them off every month which was the 8 years prior to December 1994. I am no spring chicken.
I never assumed you were a spring chicken, didn’t consider it at all, so your stats do not change the intent/message in my post. Carrying a balance is what affected your score, not the sole act of having a limit reduced. [-SM]
I paid, on average, $1K a month to my credit cards for almost exactly 13 years. That’s $156,000…what did I buy? A house? Cars? Nope.
So you carried a large balance for 13 years and the credit card companies made a lot of money from you? Ok. [-SM]
Credit card companies are a business. They are not in the business of giving you free stuff and maintaining your accounts for FREE. They are a business, there to do one thing, make money for their stockholders and pay their employees.
One day, they will bite you, and you’ll get mad at them.
I’ve been using CCs for years and I manage my credit/money to MY advantage, not the credit card companies. I do not pay them one red cent in interest or fees. I realize they don’t manage my accounts for FREE, but their profit is earned from other people who carry balances – not from me. If they do something to make me mad, I stop using the card. When you don’t carry a balance, it’s that simple. [-SM]
For me, the free airline tickets I got a couple of times a year was but a shadow of what I was feeding the credit card companies. You won’t get rich on reward points.
Responsible card holders don’t “feed” the credit card companies anything. In fact, we’re called deadbeats for a reason. At most, they earn money from merchant fees when we use the card. *shrug* Doesn’t hurt me any. My intent is never to get rich from credit card rewards – that thought never crossed my mind. But I will gladly accept free stuff by doing nothing but buying the same things I would have bought anyway. [-SM]
The point here is to take control of your own money, every single dime of it. Make it your slave. Do not be a master to money. You are better at budgeting your own money and tracking it than the convenience of the credit card statements.
I control every dime of my money every single day and I like the system I have in place. [-SM]
Study after study shows that when we pay with plastic, whether it be debit and especially credit, we spent at least 12 percent more. 12 percent of my income is $13,320 per year, or a bit over $1K per month, hence my experience with credit cards in my purse for 13 years – stupid for ME.
Again, YOUR experience is not MY experience. Studies are based on sample sizes and the results do not apply to ALL people. [-SM]
SM: This is how I keep track of my expenses. I live one month ahead, so what I earn in January pays February bills, etc. At the end of January, for example, I plan all my expenses, on paper, in absolute detail for February. Then I spend accordingly.
Your system is great if it works for YOU. On the other hand, it wouldn’t work for me because I live an entire year in advance. I focus on saving/investing FIRST. I don’t plan for expenses, I plan for long term goals. Only after my goals are accounted for, then bills are paid with cash flow as they come. Anything else is free game. [-SM]
I found out when I got rid of credit cards, I spent less, planned more, and felt like I had gotten a raise!
It’s not that hard. I track it all in Excel.
I use Excel too…and credit cards. [-SM]
I only hope that one day, SM will see the light. What does this light look like that you keep referring to? LOL [-SM] I, too, never had a late payment on not only credit cards, but everything else. I am extremely responsible. I’ve never had a bounced check either, and I always pay off all the revolving credit I had early, in most cases, extremely early.
This post isn’t about making late payments, bouncing a check, or paying bills early. The entire message was about the effect on your credit score when a credit card limit is reduced. When that happens, the primary reason behind a significant score reduction (which you stated in your original comment) is carrying a BALANCE on your credit cards. [-SM]
The only justification I can see for credit cards is for people who travel a lot and do not want the inconvenience that can, and does occasionally occur, with car rental agencies.
As another fabulous reader stated, credit is a convenience and debt is a tool. As with any tool in life, if used properly, it makes things easier, not harder. [-SM]
I didn’t take any of this personally. It’s my experience. You, who are reading this can do one of two things:
1. Think I’m a nut and move on;
2. Try doing it my way for 3 months, as an experiment. If you like, you can always go back to using your credit cards – the credit card company won’t mind….
I dare you to take my challenge, SM!
I’m glad you didn’t take this post personally, and although I don’t agree with you, I don’t think you’re a nut. LOL! However, your dare is moot because I’ve tried your way and it doesn’t work for ME. I’ve found that I spend MORE money when I use cash. But my spending is more controlled, planned, and deliberate when I use credit cards. The CCs help me manage my discretionary income and track WHERE my money is going, which is important to me for planning purposes.
If you hate them, that’s fine. I can see that it’s based on your personal experience. But you can’t assume everyone else should hate credit cards too. YOUR experience is not MY (our) experience. What works for you does not work for everyone. Even if no one agreed with me, I’m just here to enlighten those who don’t understand how the credit system works. [-SM]
Hey there!
This is great info you’re sharing!!
And by the way….
Happy Mother’s Day to all of the moms!
Peace, blessings and DUNAMIS!
Lisa
Great post. It is lovely to see spirited and logical debate about money. I see both points but I feel the poster may not have a strong understanding of credit. How can one accurately track expenses unless each purchase was written in a notebook. Right – so not happening. Credit cards are only “bad” if not used properly. For me, using them responsibly did me a whole mess of good and heck, they are totally worth my yearly airline tickets (score!). I don’t pay any fees and I can review my expenditures and see what I should not have purchased and adjust. And I feel much more secure with them. I was burned on an ebay purchase and my cc company gave me a charge back. But let me say this: I screwed it up badly in my early 20s. We parents have a huge responsibility to teach our kids about credit. So nice to see this. I may have my 10 year old read this post.
I shun credit cards and even using my debit card as a credit card because of the increasing interchange fees. These fees can eat a good portion of a business profit and are sometimes passed to the consumer. I think if more consumers knew what the impact these fees had, especially on small business, they would use cash or at least ask the business owners preferred method for payment.
I choose where to shop based on customer service, quality, and competitive prices. If a merchant raised their prices because of a credit card fee, they’d lose my business if their prices were no longer competitive…unless the quality of their product or service was superior and provided a significant trade off (think Nordstrom).
Other reasons I prefer credit cards over cash/debit…never mind. I’ll make it into a post sometime next week. [-SM]
Now, I am taking offense. That’s too bad. [-SM]
I didn’t put the “spring chicken” thing in there for any other reason, but to say that I am older and have been down a long road with CC’s.
Regardless of why you put it there, even with the further clarification, it still didn’t change the intent/message in my post. [-SM]
I did not carry a CC balance for 13 years, just to clarify. If I had taken that money and invested it at a modest 6% return, where would I be?
No idea where you’d be. But I do know this, your comments aren’t adding up. Further below, you said you’ve never paid a dime to CC’s in interest so the hypothetical question doesn’t make sense. If you only charged what you’d buy with cash anyway (i.e. bills, groceries, subscriptions, fitness, medical, etc.) and always pay the balances in full, there would be no hypothetical money to invest at 6%. The money would be spent anyway. That question would only make sense if you paid interest/fees as a result of carrying a balance from those purchases. Then yes, that money could have been better invested elsewhere. [-SM]
Debt is not a tool, unless you call it a tool to take you to the poor house. Any debt is BAD, and keeps you from taking the next step to WEALTH. We do not get wealthy by paying banks interest fee’s of any kind….or even putting ourselves into a position to do so.
Again, I don’t pay any fees…of any kind. I only charge what I have the cash to pay so I do not put myself in a position to pay any fees either. At any time during the month, I could pay my balance in full. [-SM]
It is not good to take advantage of anyone or any company, for your own benefit. Karma has a way of coming back to bite you if your heart is not in the right place.
Business is business. Money management is money management. This has nothing to do with Karma or anyone’s heart being in the right place. That sentence was just plain silly. [-SM]
Credit is not a convenience that is FREE. It is in my world. [-SM]
I believe in calling the shots like I see it. Me too. And? [-SM]
I have thought a long time about not reading this blog anymore. The love of CC’s and the love of the FICO score just sickens me. I love credit cards AND high credit limits. Although I’d hate to see you go because of my preferences, your opinion will not change me. I’d also hate to see you get sick over something you WILL see again, so I guess this is goodbye. [-SM]
It’s not the FICO score that you should appreciate. It’s your own mind, your own abilities, and what you have learned that should be appreciated. I value my mind/abilities and it’s because of them that I am able to APPLY what I’ve learned and use it to benefit me. A high FICO score is one of the end results, not the means.
There is nothing in this life for free. I agree, somebody’s paying for it somewhere. To keep this on topic, with regards to my credit cards, the fees are paid by merchants and consumers who carry a balance. [-SM]
I tried, for 13 long years, and didn’t pay a dime to the CC’s in interest. Been there, got the t-shirt.
I’m confused. Earlier you said you paid $1k/month in credit payments for 13 years. How were you making payments but not paying interest? And the hypothetical question about investing at 6% what you were sending to the CC company? Hmm…doesn’t make sense, but ok. [-SM]
I am sorry that I am not one of SM’s fans on this topic. SM, you should be more open minded.
As I’ve said before, you don’t have to agree with me. No one does, and that’s ok. But it seems YOU are the one who isn’t open minded. You are hard set on hating credit cards and the evilness of credit card companies and I’m just trying to explain to you why credit cards are NOT evil. On the other hand, I have tried your way of doing things. It just doesn’t work for me. Why can’t we just agree that you have a preference, I have a preference, and they aren’t the same? Your views on credit cards will never influence me. Save yourself the frustration. [-SM]
Edie Brown, St. Louis, MO
I’ve been a lurker on your blog for quite some time. Whether I agree with you or not, I find your post generally helpful.
I read the comment posted on your blog and I think the individual was trying to be helpful to you and warn you with what she expected would happen (based on what happened to her). She seemed to simply care about your well-being.
Instead of realizing that your experiences w/ credit cards have been different than hers, so of course your opinions are going to be different, you felt the need to defend yourself, and in the process, publicly attack/humiliate that individual… all this after you say in the post before how you think blogger who fight are retarded.
It’s too bad, it really is.
Did you read the entire post? If so, did you see this:
“Editor’s Note: this post wasn’t an attack on the reader but intended to dispel the myths of credit cards and credit scoring.”
-or-
“Your credit profile is not my credit profile. What affects you may not affect me. Here’s why:”
-or-
“YOUR experience is not MY experience.”
The intent of this post was not to defend MY choices, it was to dispel credit myths and explain what many people don’t understand about credit cards and credit scoring. If you didn’t read it that way, then you’re right, it is too bad.
And please tell me where did I publicly “attack/humiliate” this individual?
Also, please explain to me how writing a serious/focused post on MY blog about a topic that fits MY blog theme/target audience and sharing FACTS that I know based on MY experience/research is a blog fight? [-SM]
Single Ma: I am sad for you and will pray for you.
As is a quote from the only black woman on this planet who is a billionnnaire:
“It is not the concept of ‘do unto others as they would do unto you’, it’s what your heart is going into it in the first place.”
I feel for you SM. Your attitude that you are getting benefits, on the fees of others, who are not as smart as you, as fortunate as you, who do not make as much money as you, who can’t plan like you, and that is so sad. You are taking advantage of those less fortunate, instead of standing on your own two feet.
I am in your income bracket and tax bracket, also with a daughter, 16. I come from a life of poverty, drug addiction, didn’t even graduate high school, paid my way through college debt free, had two abusive husbands…took me 20 years to break my chains.
No, you are not standing on your own two feet as long as you “consider” yourself debt free. When you pay off your CC’s each month, and then you go swipe that “glorious plastic” the first time, you are, from that time forward, in debt…in debt until the next bill comes.
I am not one of those unfortuante people who you are taking advantage of because you are so smart, so educated, so fortuante, do driven, so gloriously better than 99 percent of us, and haven’t been for a long time.
I was a business major and I have a business mindset. Although I regularly support the less fortunate (tithes, offerings, donations, volunteer, etc.), I firmly believe in capitalism and will never downplay my strengths because I feel sorry for someone else. [-SM]
To clarify for the readers: I carrried CC balances for 8 years, paid them off in 12/94, paid them off every month, with no interest for 13 years. I did pay interest for those 8 years.
Thanks for clarifying but that does contradict your previous comment that you “didn’t pay a dime to the CC’s in interest.” I understand now and it makes sense. It also explains why your score took a nose dive – again, trying to refocus this back to the topic. [-SM]
I am not into a blog fight. I didn’t consider this conversation that way. I was just posting an opinion, and you, SM, took it and distored it. I feel for you.
First, thank you for confirming this is NOT a blog fight. I don’t do blog fights. From my perspective, we are simply exchanging information/opinions that support our points of view – a debate if you will. However, I take exception to your comment that I distorted your opinion. Your opinion is YOUR opinion, I can’t distort that. If I misrepresented something you said, you are welcome to clarify and you are always welcome to comment. [-SM]
I really do.
I do not know what hit a cord with you, SM, that caused you to get so passionate about this. For one thing, I am glad I struck a cord. I hope you sincerely think about it, in the months or days or years to come.
You didn’t strike a chord. You left a comment that was of interest to me and I parlayed it into a useful post for other readers. YOU said you were offended now so I must have struck a chord with you, but I’m not upset at all…even as I write this. [-SM]
And, as far as the $156K, if I had invested it at 6% over 13 years, it had at least doubled twice (rule of 72) and I’d be sitting on just short of a half million…
Now that you’ve admitted to paying interest for 8 years, I understand the hypothetical question. However, if like me and many others, you only charge what you need and/or what you can afford to pay in full, you can still invest your excess income. Credit cards don’t keep you from investing and building wealth. You keep saying it but have not explained how. [-SM]
Edie in St. Louis, who is going to wealth, for the right reason, and not to take advantage of others.
When you invest, do you think someone is not on the losing end when you gain? Please think about what you’re saying and implying of me when I use my credit cards.
At any rate, good luck to you and thanks for the prayers. [-SM]
I, too, can see the validity in both methods of thought. One is the Dave Ramsey perspective where he considers using debt for the purpose of leverage, to get reward points or to use as a convenient way to track expenses (even if you pay your card off in full) is bad, period. Dave also doesn’t care about FICO scores because he believes that if you’re debt free and only pay for things with cash or with a debt card to make purchases, a FICO score doesn’t matter. This even applies to purchasing a car or a house. Dave talks about credit card companies as if they are the devil and to many people who are been stung by a credit card company because of not using credit responsibly or were brought up in a household where cash is king may feel the same way as Dave.
The other method of thinking is using credit responsibly by paying off your bills in full before the interest kicks in, using O% interest as leverage and having a clean credit report to have the ultimate FICO score to receive the best or most competitive offers to use credit to a person’s advantage.
I think it really depends on the person on what method is best for them. I know people who have tried to follow Dave Ramsey’s method and have had outstanding results. I’ve found that most of these people, but not all of them, are people who have had serious trouble in the past with using credit responsibly and need a major faith based intervention to turn their financial lives around. They don’t have the discipline it takes to make sure that they consistently track their credit card due dates and retain enough cash each month in their checking accounts to pay off their bills in full each month. They also aren’t interested in learning or haven’t a clue about how to use the debt to equity ratio equation to their advantage to make sure that they have FICO score in 760+ range. They need a simple, straightforward budgeting method. I’ve also met others who have tried to follow Dave’s cash only methods and have fallen off the wagon so to speak because his budgeting style is “too hardcore or restrictive”.
Each debt free method requires discipline, but just a different type of discipline. They also both work. I am still going back and forth with trying to figure out what method I like the best. I like the convenience of tracking my expenses on a card, but I don’t like to have constantly check to make sure that my card company hasn’t moved the due date on me to avoid getting dinged with a late fee and an interest rate hike. I’ve haven’t been late on a payment in my 12+ years of owning a credit card thank goodness, but I have had instances where my credit card due date has changed and I’ve had to change my budgeting around to accommodate the new date. I’ve also tried the cash only method, but it is not as convenient as using a card.
Great comment! I think this is an excellent synopsis of both POVs. [-SM]
For clarity once again, SM wrote:
“So you carried a large balance for 13 years and the credit card companies made a lot of money from you? Ok. [-SM]”
My Answer: No, I carried a balance from 1986 until 1994, 8 years, after that, I paid my balances in full, every month, and did not pay a dime of interest for 13 years additional, from 1994 until 2007. How many times do I have to repeat this?
And how many times do I have to say thanks for the clarification, now I understand? I’m beginning to think you are talking to yourself and not even reading my responses to you. [-SM]
SM then wrote:
“I’ve been using CCs for years and I manage my credit/money to MY advantage, not the credit card companies. I do not pay them one red cent in interest or fees. I realize they don’t manage my accounts for FREE, but their profit is earned from other people who carry balances – not from me.”
My answer: So there’s the sticky point. SM, you make some advantage off of people who are not as fortunate as you, not as educated in many ways as you, from people who are dumb, and can’t plan like you do.
It is not the CC company that you are taking advantage of, it is US, the little people. I am no longer one of the US technically, but I got to stick up for them. For me, I will never forget what it is to live on rooftops, sleep in laundry mats, sleep with whatever guy I could find, and eat one bologne sandwich a week. I will not forget.
…it’s interesting…you say that “but their profit is earned from other people who carry balances – not from me”
SM, you got to realize that at least HALF of the people, on this site, are the OTHER “people”. It is not ME anymore, as I got out of the GAME.
As Oprah says, ” ‘it’s not do unto others as you would have them do unto you’, but “it’s how you go into it with your heart to begin with”.
Enough said. You are a feeder on the most fortunate in an indirect way. I am not. I want to help them get to where I am.
Don’t try to turn my credit card use into a philosophical issue. You are beginning to sound crazy. [-SM]
I couldn’t invest during those 8 years that I had CC debt. I was too broke.
SM wrote:
“I was a business major and I have a business mindset. Although I regularly support the less fortunate (tithes, offerings, donations, volunteer, etc.), I firmly believe in capitalism and will never downplay my strengths because I feel sorry for someone else. [-SM] ”
I write: OMG, SM, I have a degree in business, with the IT twist. I do not consider people that I give to less fortunate. They are just in a different place then me. I do not give if they are those that are just there to ride the system.
I am so sad that you consider true people less fortunate.
SM: You are so far on your high horse, I can’t even begin to talk or type about it.
You called them unfortunate, I called them less fortunate. Let’s not play the semantics game here. I used the phrase ‘less fortunate’ because I have enough sense to acknowledge that I am fortunate to be where I am. [-SM]
OK, SM, I admit, you are smarter than me, I admit that you plan more than me, I admit you are better at the CC game, I admit that you are a better person than me.
I fall on my sword. *side eye* [-SM]
But, I know this, I have a bigger heart than you do.
I hope that you feel better and more glorious than others who are reading this.
It is time for you to take it down a notch, and remember some things. God, karma, whatever is about to smack you down a notch. You are not humble but on your own ride, for your own benefit.
Based on this comment alone, I can see you’ve completely misunderstood everything I’ve been trying to say and I won’t even waste my time trying to explain anything else to you. I’M DONE. [-SM]
For me, I will continue to mentor, to teach, people, to be wealthy. I will not put up with debt, of any kind. I will not be so high and mighty even think for a moment, that I could take advantage of people, to take as you so eloquently said: “but their profit is earned from other people who carry balances – not from me.”
How very sad and short sighted.
Edie in St Louis.
SM writes: “Don’t try to turn my credit card use into a philosophical issue. You are beginning to sound crazy. [-SM]”
I write: No, I am not crazy. You, SM, are feeding off the profits of a CC company, who feeds off the profits of those that are not like you, for your own benefit.
As I said right off:
1. You can think I am a nut, and move on (paraphrased)….
It’s not math. It’s people, and you refuse to see that. Most people have a problem with cc’s and debt.
As long as you can be on your high horse, and think you are so much better than us, then you are ultimately doomed.
As I said, I will never FORGET where I came from. I have a bigger heart than that. I will not use, any system, if I can help it (the federal government is the exception to the rule, because I have no choice) to take advantage of, for my own benefit, when I could stand on my own feet and be done with them, and make our social problems worse.
SM, you are so close….
I don’t know, SM, if you’ve looked at the statistics in this country on CC debt, but I urge you to go look it up on your own. It is sad. It is sad because money is the biggest reasons for divorce. It is probably the biggest reason for ultimate frustration, that leads to domestic violence or other worse social ills.
As I always say: “Stupidness leads to desperation. Desperation leads to vulnerability. Vulnerability leads to the dark side.”
CC are stupid, from every angle imaginable. It is the seed that leads so many of us into an endless loop of despair.
It leads to desperation for most of us (that aren’t as smart, fortunate, as you, or make as much money as you, etc.). Desperation leads to bad decisions, and I don’t even want to talk about the “dark side”, either from my own experience or the experience of others.
I stand here as your monetary equal and debt free but the house equal. I stand here, as a single woman, with a 16 year old daughter, who drug herself out of the eternal hole. I have a different opinion, a different look on life.
Well, as I always say: “We shall see.” I need to start my own blog….LOL
I still consider this conversation not too bad, but I do not like the illogical stuff.
Edie in St. Louis
Great comment from Ms. ATL!
I have read & still read Dave Ramsey, AND I am also a CreditBoards reader/fan. Like you, I am still trying to figure out which method is going to work best for me, although I will admit I can’t imagine I will ever give up ALL credit cards!
It seems the passion runs high around here! LOL. In fairness I see truth in both opinions even though I am in favor or no debt (especially CC debt) whatsoever. The trouble I see (IMO) is that there are so few people who have the kind of control it takes to manage credit cards the way you (SM) have. I, alas, have tried and failed miseralbly :o( That said, I will NEVER use credit cards again. BTW, I find that I can track my spending/expenditures quite well without using credit cards using my checking account & exel. Paperwork is paperwork afterall. One last thing, and I may be weird, but I don’t nor have I ever known what my FICO score is. I guess I just don’t care. I am 43 yrs old, own a home, married w/children and it just doesn’t matter to me. I’ve liked reading all the different opinions posted here, but as for me and my house, cash is king!!
Blessings all!! <
Ok I’m not sure how it happened, but the 2nd comment up there that appears to be a duplicate from me is NOT from me. I only posted the first one without the Oops. . Is that creative spamming? lol
Thanks for bringing it to my attention. They ARE getting creative! The duplicate comment had a credit reporting company in the url and a completely different ISP # than yours. I deleted it. [-SM]
Wow, interesting posts! I think the bottom line, at least for me, is to PLAN! The most important thing for me as a Dave Ramsey “follower,” is to have control over my money, and the best way to do that is to PLAN! Using credit cards, for me, was not a good plan. I tended to spend more, and then it got out of control and I couldn’t pay them off every month. I use cash and my debit card now exclusively. I’m also saving for emergencies and my childrens’ college educations. If I didn’t have a plan, I couldn’t do that. For instance, we have about $12K in credit card debt which we’re trying really hard to pay off. But my DH has to go to the Cleveland Clinic soon for a heart issue… that means money! Before, we would have just put it on a credit card and paid it off later, along with mounds of interest. But now, with our plan, we’re only paying the minimum on the debt for a couple of months and socking away the extra for our trip to Cleveland. So there will be no more money put on a credit card. It may take us a little longer to get out of the debt now, but we’re not adding any to it!
So if using credit cards and paying them off every month works for you, go for it! Just have a PLAN! Take care, everyone!
Lordy lordy, it is hot in here! I am a divorced mom of 19 yr old and a 12 yr old. I have never had a credit card, not because thay are bad but because I never had a need for one. I owe my mortgage and a loan of 4k + which I could pay off if I chose to but can’t seem to convince myself to.
I lurk on this blog everyday for inspiration to help me along the way and indeed the way is getting clearer. I admire your can do spirit and the fact that you have really strong views.
If there is one thing I have come to see is that PF is personal and your blog is about you and your world view. If people don’t like it they could always go where they agree with every post or get their own blog!
There seems to be a lot of discontent with your personal ways of using credit cards to your advantage … and at 24, I’m doing the exact same thing as you, so I guess a few posters have problems with all people who “take advantage” of the system.
To clarify a point that some seem to be returning to, a person doesn’t have to have a large income to be able to use credit cards to your advantage. I use them, just as SM does, to pay for regular purchases. My credit card gets me points for groceries, and every month or two, I have enough points to pay for some of my regular groceries. Why would I give that up? As SM said, credit card companies are still getting money, using merchant service fees, as well as by interest from people.
And my income? my net is around 28k – you don’t have to be rich to understand how your money should work for you! The important thing, as always, is to live within your means, whether that means you have $250 or $2500 in spending money a month, you still have to keep your lifestyle realistic.
Blaming credit card companies for a lack of personal accountability is just stupid. No one makes you use the money – it’s a personal decision to do so.
This is my first visit to your site. I think I will have to mark it as a favorite. I also am a single woman with similar earning power, only debt my home and healthy savings. Dog gone it, where do you sign up to get the teen-age daughter? I want you to now I was directed over here to read this thread. Instead I read your entire site, including your financial goals. You have humbled me into kicking it up a notch when it comes to savings. Thank you!!!
As for this thread. I handle my finances similar to how you do yours. Yes I use credit cards strictly for my convenience. I acknowledge that CC use comes with a risk so take steps to protect myself (budget, cash on hand, etc.) I have never gone after the rewards because I do not believe for my personality that being rewarded for risky behavior would be good. That is ok though because my life experiences are not your life experiences. We each need to pick our own plan. For some the plan will not include CC use and that is ok. The trick is to tell our funds where to go whatever the form of payment is (cash, credit, loose change, barter, etc.
Too many forget credit cards are not evil, they are amoral. In my mind the use of a credit card in no way gives me a gain on the backs of others. No more then buying my groceries instead of growing them. Or shopping at a thrift store when I can afford new. Too many blame the CC and their companies for unwise choices. Something I do not understand but I haven’t been in their shoes.
I understand both points of views. In my opinion, credit card companies and banks are about as evil an organization can get — so there is some moral issue in there for me. I have also done much, much better on a cash/debit budget than on a CC budget. So do the vast majority of Americans — why else would fast food places start accepting credit cards despite the outrageous merchant fees? The answer’s simple: people spend more than what they have.
My husband is one of those that does better on a CC. He puts the big items, utilities and MBA tuition and such, on it. No discretionary purchases, maybe fast food when he travels. I could never be like him. You may or may not be one of these people, I don’t know your finances at such an intimate level, but I will go on a limb and say yes. Your way obviously works for you.
I would say keep up the good work, but I would humbly suggest that you keep in mind, with your postings, that you are an exception and not a rule. Most people do *not* have the ability to spend the same on a credit card than with cash. Maybe include some caveats the next time you make a post about how useful credit cards can be?
No caveats needed, my site disclaimer (right sidebar) says it all:
“I am not a financial adviser. This blog is a reflection of my personal opinion, experience and financial choices. For financial assistance, please consult a licensed financial services professional.” [-SM]
Single Ma, great post (and responses) as usual.
There are many that don’t want to use CCs and are cash based. There are many that are CC savvy and know how to use credit to their advantage. I say to each their own. Do you!
Just for clarity – there is more than one black, female billionaire. The first was Sheila Johnson (Bob Johnson’s (of BET) ex-wife). The second was Oprah Winfrey.
ElleX
But if Edie keeps her money anywhere other than her mattress, she, too, is making money off of poor and ignorant people, is she not? A bank might give her 5% on her savings account because they are charging ignorant people 12% on car loans. She is awfully full of herself and her big heart, but she has some seriously closed eyes.
wow i didn’t know things got so heated until i saw your most recent post and i had to come back here and see what happened. Wow. All I can say is that SM has more patience than me! thanks for the interesting reading, sorry to read that it got a little crazy (on Edie’s end) towards the end.
one last thing, regarding AMES’ comment about not using debit/credit cards because businesses have to pay interchange fees. i strongly disagree with that mentality. a business is in business to make money. bottom line. they are not REQUIRED to accept credit cards, many choose to in an effort to increase their consumer volume. however, there are places that will not accept credit cards that do quite well. there’s a local chicken place near my house that only takes cash and the line is out the door everyday.
the person that runs that chicken shop is a small business owner and she made the decision to only accept cash. her business is booming. could she make more money if she took credit cards? maybe, maybe not. but the bottom line is it’s her choice.
and as far as fees eating into their profit margin, PUHLEEZE. rates can be as low at 1%, i haven’t heard of anything higher than 3 or 4%. the higher interchange fees are usually assessed to merchants with higher risks.
i really don’t think consumers should worry about the impact credit card fees are having on merchants. we are a capitalist economy, businesses and consumers each make their own choices.
So why can’t this commenter argue their point without making personal assumptions, passive-aggressive tactics, and trying to force the writer to agree that their views are the only ones that are valid and right? A quote from a thousand-aire black woman, “Boo girlfriend, BOO.”
Point of clarification for Edie — Sheila Johnson, former wife of Bob Johnson (BET), was the first African-American billionaire not Oprah. That is, if she deigns to come back and read this blog.