Myths and Misconceptions about Credit Cards


I know, this may seem outside my normal milieu, but bear with me. I’d posted a grumpy note on farcebook a while back about getting credit card junk mail and was there a way to get rid of it? Which would have been fine, and I did get a helpful suggestion for reducing it (you can’t, it turns out, eliminate it). But I had added that I’ve never had a credit card, and don’t want one… and that brought every busybody out of the woodwork. How can you live in the modern era without one? They gasped. Oh, just pay it off every month, they advised. If you don’t feel like you can handle a credit card… they scolded.


Even leaving aside that I hadn’t asked for advice on getting/using a credit card, I have actually put a lot of time and thought into how I handle my finances. That research had confirmed my initial suspicions, in that you really don’t need a credit card to exist in modern society. It’s not that I don’t think I could handle one, or pay it off monthly (although I have also been advised to leave a small balance owing all the time, because that’s the way to do it, which just made me scratch my head). I run a household on a cash basis, have for a long time, and if we don’t have the money for it, we don’t buy it. I doubt we’d overspend if we were using plastic. What I was surprised about was how many assumptions based on outdated data that people were making, and that’s why I decided I’d step outside my usual topics here and address a few of them. These aren’t just my own opinions – you’ll find links that will take you to more data from reliable sources, I’m not asking you to take my word for it. You’ll see that I’m not alone in being suspicious of the motives of credit card companies in trying to build themselves up to be the be-all and end-all of American credit scores and fraud protection, too.


Myth #1: You have to have a credit card for fraud protection, especially online shopping.


No, you really don’t. Any good debit card (yes, you do need to ask questions when you choose a bank or account to make sure this is true of yours, you’ll note that a theme of this post is you can’t be lazy) has the same fraud protections as a credit card, these days. While it might not have been true once, there’s a reason my debit card has “MasterCard” on the front of it, to show that it’s treated the same as a credit card. Anecdotally, when my card was skimmed a few years back, and fraudulent withdrawals to the tune of several hundred dollars pulled out of my account, I was able to call the bank as soon as I noted it, and have the money back in my account by end of day. Now, it was inconvenient to be without my debit card for a few days while the new one arrived, but you’d be in the same situation if you were using a credit card. I do also now have more than one debit card accessible account, which costs me nothing, but it does limit my risks for things like travelling (which I’ll address later) and online shopping. I also use Paypal extensively for online purchases, and have used their fraud protection as well, especially handy when I’m buying on Ebay or Etsy, which can have dodgy sellers (and yes, a lot of honest ones, but you know what they say about bad apples). In other words, there are many ways to keep yourself safe, beginning with shopping responsibly – I don’t sign my card up for subscriptions, for instance, unless I really know and trust the source, like Netflix or my utilities. And even those, I’m quite aware, can be a pain when closing them out.


Myth #2: You need a credit card when travelling, for booking flights, hotels, and rental cars.


Not for any of these. I’ve traveled a lot the last few years, with my debit card and cash in hand. I tend to pre-purchase the hotels or rental cars, often using Priceline for deal-shopping (although it is not always the best deal, so shop around). This eliminates some of the concerns people usually have over hotels and flights, as you’re all paid up when you get to the point where you’re looking at tickets and checking in (airlines, by the way, don’t give a flip if you’re buying with credit or debit). Rental car companies do usually pull a separate amount as a deposit, yes. I plan ahead for this, and I have not seen it go to an outrageous amount. If you’re concerned about it, call ahead and check. Make sure you have a generous cushion in your account – as I said above, I use a separate account for travel expenses. I can transfer funds rapidly from one account to another, so even unexpected things can be covered. Also, you can get prepaid cards for some uses but be aware that hotels and rental cars won’t take those (most of the time).


Myth #3: You need a credit card to build your credit score


Maybe. Or maybe not. This, I’m not sure on through personal data, because I have no idea what my credit score is, and personally don’t care. I’d like for it to be zero. But, but… what about loans? comes the wail of disbelieving concern. What about them? I don’t do car loans – I buy my vehicles in cash. Yeah, that means you might start with a beater, so? I’m not picky about the looks of my vehicles, with savvy shopping you can avoid lemons, and then there’s this: save up and get a better car. The average American car payment is $500 a month. Save that up for a year, and you can buy a pretty nice used car. Do it for two years, once you have that pretty nice one, and you’ll have a sweet deal on a car that is past the major depreciation slope. If you pretend you’re paying a car payment, sock it into the bank, and then buy a car, you’re actually getting more car than if you had paid out that same amount to a financing company, because you aren’t paying interest on top of the purchase price.


Now that I’ve knocked over that part of the myth, let’s look at the big one. The Mortgage. I don’t plan to buy a house using cash. At least, not yet. Might be able to in the future if I live frugally and don’t get up to my a… lligators in debt. However, what I can do is seek out a mortgage company that will do manual underwriting. There are a lot of lazy companies out there that prefer to just take the shortcut and check a FICO score. But there are some that will put the effort into verifications of employment, deposit (for downpayment) and credit history as a whole picture. This is a much more secure loan picture for them, and for you, so it can result in a lower interest rate if  you’ve put the effort into preparing yourself for that level of scrutiny.


Myth #4: You need a credit card for emergencies.


I’m going to do a little ladylike recoil here, and a big Oh Hell No! This, this is how you get in trouble. This is when the snake you’ve been playing with whips around and latches on. I get that emergencies happen. I’ve been broke, desperate, and willing to take any lifeline to get out of it. The problem is that this may look like a flotation device when you’re drowning, but later it’s going to turn into an anchor and drag you right back down. Instead, save up an emergency fund in a savings account, and don’t touch it unless it’s an emergency. The transmission going out, that’s an emergency. The kid wants to go on a Band Trip? That’s not an emergency. How much do you need in this fund? Well, that’s up to you. We’ve got about a month’s worth of expenses (bare minimum, keep the lights on and house going, kids fed) and will be building that up to at least three months worth in the future. What does that money do? It just sits there. Savings accounts are pitiful on interest return any more, but the money is there if we need it, without having to jump through hoops to get it out. On the other hand, it’s not too easy to tap into, either.


Truth: you spend more if you’re using a credit card


The studies I’ve seen show that consumers will spend up to 100% more if they are using plastic, which is why I jumped through the hoops as a vendor years ago to be able to take plastic at events. There’s a visceral reaction to spending cash, seeing that physical symbol go from your hand to theirs, that you don’t get when it’s all swipe tap and done. Don’t believe me? Try it some time.


Truth: The average American dies with over $61,000 in debt.


While the overall debt burden is only tangentially related to specific credit card debt, it is one piece of the puzzle picture, and not an insignificant one. I noted in my original post about the credit card offers that they had started coming once I’d graduated from college, and it’s part of the marketing scheme that is going so well for the credit card companies. Get them early, get them in deep, feed them misinformation about how much they need the cards, and they’ll never get away from them. For every one of you that insists you pay off your balance every month, and treat your CC like a debit card, there are a hundred who don’t. Even Equifax, one of the big credit reporting companies, urges consumers to work on becoming debt free and paying them off.


I realize my attitude toward debt and credit cards isn’t normal, but I’m fine with being weird, as my regular readers know very well. I also have a history of having been left out of the financial decisions in a marriage, having my identity used fraudulently, and having been poorer than dirt. I don’t want to ever get back there, and I’m blessed with a frugal husband who shares my values and works in tandem with me toward the goals of being debt-free and living comfortably within our incomes. I’m not going to run around condemning people for having credit cards, unlike some people who seem to take my reluctance to play that risky game as a personal affront. But I do think that everyone ought to approach their finances with eyes wide open, and that means getting some of the mythology surrounding it cleared away.


43 responses to “Myths and Misconceptions about Credit Cards”

  1. In Europe and Israel, “credit cards” were/are traditionally intermediate between US-style debit cards and US-style credit cards: the whole balance was/is automatically taken out of one’s paycheck once a month. It has its downsides in terms of flexibility, but building up big levels of credit card debt is nearly impossible. Of course, most households in Israel live with their checking account almost permanently in overdraft… 😉

    1. Overdraft can be dreadful, too. I know it used to be that fees were horrible, but I haven’t had to deal with that for years, now (thank goodness).

      1. Most Credit Unions (don’t know about banks) offer an ‘overdraft protection’ feature. It is actually a $1,000 18% interest signature loan; however, paying back the money at 18% is mild compared to the overdraft fees. I’ve never used it, but set one up right after a friend had several ‘fees’ on his overdrafts.

        1. David-2 Avatar

          An in fact most banks let you _decline_ overdraft protection – but it is definitely opt out and sometimes a hassle and you have to check it every year or so. And _that_ prevents all kinds of mischief from happening to your checking account, so it’s worth doing, IMO.

  2. By the end of this year I will have all of my credit cards paid off. I only have one left, and once it is paid off, that money goes to paying off the next item on our list (RV, then garage, then mortgage). That card I’m still paying off? I don’t have a physical card. My debit card pays for everything just fine – hotels, flights, car rentals, etc. I do have a second account at the same bank with a second debit card in case my main card is lost or compromised. I just transfer money into the alternate account until I get a replacement card.

    1. Sounds like a good plan being executed. And the thing with the accounts is what we do.

  3. I also have never had a credit card. I do have a car loan and it’s true that I am paying more in interest than I would have if I had a better credit score, but on the other hand my car loan is the only debt I have. I paid just over half of the total price of the car in cash, from an insurance settlement when my last car was totalled, and since I bought the car used, I have never owed more on the loan than the car is worth.

    1. Which is good. It’s scary how many people are upside-down on their car loans, and by how much. It’s like pushing a giant snowball that’s going to roll back and crush you.

      1. The depreciation on new vehicles is absurd. It is entirely possible to buy a new car, get hit pulling off the lot, have the insurance company total out the car, and end up with a settlement that does not cover the outstanding loan amount. (Depending on your state laws, of course.) And don’t get me started on leases–the only thing more self-destructive financially than leasing a new car is buying furniture at one of those damned Rent To Own places.

        I used to do repo work. It’s good money, but I couldn’t live with myself. A client can pay five times what the item is worth, miss one payment, end up with nothing, and still be liable for fees. That’s why the Whitewater boondoggle alone was enough for me to vote against Clinton no matter who she was running against. It took the Rent To Own model and applied it to real estate–miss one payment and all of your equity gets redefined as rent and you’ve got nothing.

        Repo work taught me the law is what you can enforce. Never sign a contract until you understand not only everything in the contract, but also the procedure necessary to bring action against the other party. So many people overlook the little paragraph at the end that specifies any action brought against the lender must be filed in the lender’s home area. When I worked in Arizona one of my clients was a bank based in Connecticut. Not a lot of people who buy used cars at a place that advertises that they will finance anyone have the resources to hire an out of state attorney.

        1. Yeah, I looked into car leases and was horrified to realize how bad they are financially. But the hype has them as being a great way to afford a car, and people don’t look beneath the shiny exterior of the sales pitch.

          There seems to be a theme here of people trying to take shortcuts through life, and having it come up behind them and bite them in the butt.

  4. I didn’t realize how much alike we are. We also have no mortgage and no car payments. I find most of the savings offers I get I can turn saving 20% or 50% into saving 100% by skipping it entirely. We do have two credit cards, but both of them are on auto pay each month. They return from 1% to 5% back to us and that ads up to quite a bit over a year.

    1. Some of my caution has to do with being in deep water financially during my first marriage, when it was almost entirely out of my control. Since then, I’ve been working very hard to make sure I never wind up in trouble again, or am prepared for financial trouble when it crops up. I’m lucky with Sanford – he sees it just like I do, and is if anything more tight than I am with money.

  5. Excellent post! I agree with every point.

    We’ve had store cards, once even an actual credit card. The credit card was never used. The store cards used for emergency repairs (you really want to pay 24% INTEREST to HomeDepot for spackling? Not for long!)

    I set up a separate account at my bank when I was on the road a lot. I could transfer funds between them easily, but if the active one was compromised, it never had much in it.

    Since my wife doesn’t use her cards, I sent the extra to a daughter in another state – to use for emergencies. I have literally had her call and say, “Dad, we need XX amount to fix the car.” and I’d say, “Just a minute.” and transfer that from the main account. With kids scattered all over, it gives me a little more peace of mind to know that if I can’t be there, my money can.

    Keeping an emergency account balance is incredibly helpful. A couple of years ago we had a pretty hefty ‘cushion’ in our accounts. (credit union, not bank) When my wife got sick due to a sepsis infection, she spent nearly TWO MONTHS in either a hospital or rehab facility. Yes, we do have excellent health insurance (I’m a federal retiree) but the copay amounts were enormous! Within a month of my wife’s release to come home, everything had been paid for. Our cushion was gone – we’re slowly building it back up, but since we are on fixed incomes it is dribbles and trickles every month. As it is, we could probably handle an emergency trip and expenses if called on. But it would return us to zero again.

    I try to move the remainder of each months ss payment into savings once a new month rolls in. It isn’t much, but those who say they can’t save anything are fooling themselves. Sure it isn’t much, and it’s a slow process – but it works. As you pointed out above, and emergency fund isn’t for trifles. Leave it alone to grow.

  6. One instance I know where you HAVE to have a credit card–
    military travel.

    The “government travel card” you’ve probably heard about on the news is in your name, on your credit, and did I mention they’re pretty dang slow to pay you back for the charges that they required you to put on it?

    1. Ugh. That’s the worst.

    2. Nobody of Import Avatar
      Nobody of Import

      Yep. Short answer there is that there’s a lot of truth behind that all, but be warned, there’s sharp edges and you may get cut like I did this weekend.

      1. *sympathy*

  7. Nobody of Import Avatar
    Nobody of Import

    I’m a cash and carry sort of a guy. Only one loan. A 1-ton for my horse-farm business I run in addition to my consulting businesses I run. Nothing but Debit. A business Debit Card at that. Supposed to be _explicitly_ treated like a Credit Card because it’s tied to an account with $1300-1500 overdraft range, period.

    For the last 6 months, I’ve been down in Florida, rebuilding my fortunes on a consulting gig there.

    For the last 8+ months, the 1-ton I mentioned is dead in the water, not economically viable to repair (Cost to repair plus DOA ACV exceeds functioning ACV by half again more.) and DOA ACV is less than the note value by a factor of a third of the note.

    For the last 6+ months I’ve been playing flail-about games renting a car from three differing agencies that let me rent in spite of their policies. But couldn’t continue to rent because someone realized what was going on and told me “no” or they didn’t have anything to renew the agreement with and the rental I had was due for maintenance and had to come back. Rather than buying, because my resources were low, it was cheaper to put myself through some of the abuse in question because I can deduct it out of the business’ expenses and therefore get much if not most of it back in Feb of next year. That came to an end this last Sunday. From the Budget people: “We will run a soft credit check on any Debit card…if you fail this, you MUST provide a credit card.”

    The bulk of the mainline car rental agencies have a standing policy, I’ve found out, this last weekend. Enterprise, Hertz, Dollar, Avis, others EXPLICITLY tell you this on their sites…not Budget, though. They will also place a larger hold on your money as an aspect of all of this.

    Credit Cards are always accepted, so long as they can place a hold on the deposit and charge you your rental fee.

    Debit cards, unless you have a proof of a round trip on an *airline*, require a Credit Card or passing a soft credit check if you’re using a Debit card for it and the rental. They won’t charge the deposit against the card and then refund it. You HAVE to have a credit card for all intents and purposes. You won’t have a high enough FICO score without one to pass their check requirements otherwise.

    As a result, I’m the owner of a shiny, cute 2013 ForTwo Passion Smart. It was the cheapest thing I could buy immediately and not deplete my cash and carry reserves. I’m having to work extra hours this week so I can make Liberty and not have problems with work- because I had to buy one on Monday or risk losing my gig. Fair warning- you may have issues with #2.

  8. Nobody of Import Avatar
    Nobody of Import

    Past the long war-and-peace exception to this list I just posted…it’s all DEAD ON. You largely don’t “need” a credit card- and should probably contemplate why you have one and what you’re using it for.

  9. Wendi Spayth Avatar
    Wendi Spayth

    As a note, there are some things a low credit score will screw you on, even if you haven’t had credit cards and don’t want them:

    Employment background checks.
    Residential renting/leasing checks.
    Obtaining cellphone service.

    If your credit score is zero, you *will* have difficulty finding employment and housing, and you will find it nearly impossible to have a cell phone.

    This doesn’t necessarily mean you need credit cards, but having a good credit *score* is important.

    1. Having obtained all three with no idea of what my credit score is, I’ll have to disagree. For one, the cell phone with low or no credit is actually MUCH cheapere to go no-contract. Sure, you have to buy a phone out of pocket, but you’re paying a tiny fraction of what you do for ‘leasing’ it from the contracting company. Not to mention the ridiculous service charges – while it might once have been the only way to go, it’s not that way any longer.

      1. Wendi Spayth Avatar
        Wendi Spayth

        Scott has had job interviews shortly after his divorce where the credit check turned out to be problematic. At one point when I was married to my ex husband, I was denied a checking account because of what his financial crap had done to my credit score.

        1. I was denied a checking account after my divorce because my ex had run an account underwater – which still had my name on it. I did pay that debt and clear it off so I could have a bank account. Took me a while.

          I’ve had credit checks along with background checks this year with no issues. I think that as long as you aren’t showing an enormous amount of credit problems – accounts in collections, and so on – that it’s not an issue. Something to keep in mind, certainly, but still not a good reason to get a credit card. There are ways to build credit without one, which I’ve linked in the article.

          1. Th3o More Avatar
            Th3o More

            Guy could not get a loan because as the loan officer pointed out, he was overdue on six different loans. Came back a week later and applied for a loan. The loan officer rather crossly pointed out that his credit was “not so good”. The guy replied that he had taken out a loan consolidation and put all six accounts into one. Told the loan officer that now he was only behind on one loan now. Darned if he did not get the loan this time.

  10. Wendi Spayth Avatar
    Wendi Spayth

    I didn’t say it was a reason for a credit *card*. I said having a good credit *score* was important, and that it mattered, and that having one of “zero” was very very bad. 300 is the worst possible score. It basically means that you have bankruptcies, foreclosures, tons of debt, judgments, etc.

    It really is important to keep up with and be knowledgeable about your credit score – even if you are steadfastly, morally opposed to having a credit card or taking out any loans.

    1. Zero simply means you have no open accounts – it’s better than having a 300, yes. Low credit score is bad. Zero you can work with.

  11. Understand your goal and it is an admirable one. Using a credit card ‘smartly’, primarily for travel, and paying it off as quickly as possible does help improve your credit score. As a retiree on a limited income, I do keep one for emergencies, because most of my money is in a 401K and not readily available.

  12. I was adamant about not wanting to have a credit card; but did worry about the credit rating thing, and Paypal. Debit cards can select ‘credit’ but the bank treats the transaction as a debit so you cannot overspend as the existing funds in the account are what you have, but the credit rating thing comes into play somehow (I’m told we earn points if I pick the ‘credit’ option.) I don’t know if banks elsewhere do that.

    Rhys has a credit card which was used when we were brought over. I know we have a car loan for the (secondhand) cars we bought but that was something of an emergency (the car we had then would not survive the trip heading to a different state for our move, but the deal we got was rather nice, apparently.)

    As for Paypal, I’ve been sure to not leave useable cash in there (the most I’ve left was something like 4 cents?) and the account it’s linked to is one of those zero-balance things that I only pop money into when I have to pay the fees or when I buy something.

    My biggest problem has been that I don’t have any utilities under my name. It’s used as proof of residence here. That was a conscious decision though as we have some other considerations to think about that I’d really rather not go into here. Makes it really hard to get a library card, which is the only thing I’d have liked.

    1. Generally though, we budget for everything – and set aside a small amount for pleasure, twice a month. It might be a DVD purchase (which adds to the entertainment library) or we do takeout and do a movie weekend at home. I’ve got a book budget that can be used either for me or the children (usually the kids, if they have Scholastic book club orders/ new Wings of Fire book out)

      Son has learned a bit about ‘I will use my allowance to pay for things in advance, if it means my not getting physical money for a few fortnights.’ He preorders books that way. I’m dangling the whole ‘you can do part time weekend work in 4 years’ to increase his spending money in front of him.

  13. Pat Patterson Avatar
    Pat Patterson

    It’s so much easier to say ‘NO’ to impulse buying if you are working off a checking account balance with a debit card. Just today, I saw a name-dropping deal on an AR15 kit in 7.62×39, and if I relied on my credit card, I would have bought it. Instead, I looked at the bank balance, and was able to say “NO!”
    I would think, “it’s just one thing, and it’s a really good deal, and I can pay it off;” and, if that was the extent of the equation, there would be no problem. But: every month, it’s teeth, or tires, or co-pays, or something, and so, without an enforced policy, the debt will mount, every month.
    It IS true that the lack of a credit card brought my score down to the point that my credit union wouldn’t give me the best rate on a new (to us) car. So, we kept the old one. It will be paid off soon.
    And so will the house.
    And then…..Presents for everybody!

  14. We’ve got credit cards, but I can’t remember the last time we didn’t pay them off at the end of the month. It helps that we got our most-used card through Costco and it pays back a small percentages of the amount charged.

    Since we use the same card for gas, food shopping, and every major expenditure we can (dental surgery last month, for instance), it actually is slightly cheaper than cash. Plus, I used to do a lot of business travel, with a substantial international component, and debit cards really weren’t a useful option.

    On the other hand, if statistics are to be believed we’re fairly atypical – we’re not really impulse shoppers, we really, really hate owing money, and we *can* pay it off every month. We’re looking forward to the end of our mortgage, when we should have no loans outstanding. We’re just hoping that as our kids start their own careers they show the same caution.

    The good thing about a credit card with a high limit is you can, in an emergency, get the needed cash to handle medium sized monetary emergencies. The bad thing is that you can run it up to that high limit on non-emergency items if you’re not both careful and disciplined.

    1. Yep, statistically you’re weird. Ain’t it grand? Normal is being broke and in debt up to your eyeballs. Good luck on the mortgage payout! I have a friend who held a burning party when she paid off hers and formally torched the bank paperwork. That was fun.

      1. I don’t think he actually burnt the paperwork, but I remember my uncle throwing a party when he paid his off. I’m thinking of doing the “Free at last!” speech when we get to that point.

  15. Th3o More Avatar
    Th3o More

    I love my credit card. I do agree with the idea of running a household on a cash basis. If I do not have enough money I just buy it even though I do have a credit card, two of them in fact. It is extremely rare that I need one though, maybe once every ten years. Living in the most sparsely populated state in the lower 48, my six year daughter and I drove my mom to the airport about 120 miles away. On the way back something in my motor went bad and I coasted to a stop at a store (closed) with a pay phone outside. With my card I got my car towed 35 miles to the closest place where it could be worked on. I got a room at a motel (with a pool, though it was too cold in June to use it) supper and breakfast and paid for my car to get fixed. Truth is that I might need a credit card once every ten years at most. Was glad that I had one on that day in 1987 though.

  16. Th3o More Avatar
    Th3o More

    I just do not buy it even though I do have a credit card A minor correction in the third sentence.

  17. You are absolutely right that one does not *need* a credit card. But I sure do find them useful. And profitable. If the card is going to pay me 5% for purchases, it’s useful. I have a budget and I pay off each card every month. I have three cards that offer different cash back percentages for different types of purchases. I use them for everything I can. For the last several years, I’ve had enough cash back funds to buy Christmas presents for all my children and grandchildren. Also, this is non-taxable income.

    My mindset is that every time I swipe (or insert) a credit card is that it is cash I’m spending. It took some time to train myself to think this way, but it’s easy now. Another way I *make* money is by never paying fees to banks or buying checks from them. I *earn* approximately $5/month by paying my bills online and not buying stamps.

    I do have a car note — but why wouldn’t I when Toyota was offering 0% for 60 months? The amount financed was less than half the purchase price anyway due to the trade-in and rebate. I generally drive a car until the wheels fall off, but physical disability required a different sort of vehicle. So, 5 years doesn’t bother me and I’m far from owing more than the vehicle is worth. This is a money-making debt, since the balance I owe is earning interest in a savings account.

    I’m retired and on a fixed income. My budget allows me put a little into savings each month. My emergency fund is healthy (that took time!). Other than the car note, I’m debt free. My primary bank accounts are with an online bank that doesn’t fee me to death — the only fee I’ve paid to them was for a wire transfer. They don’t require minimum balances, checks are free even though I seldom use them, and they refund ATM charges when I use my debit card to get what little cash I need. I have an account with a brick and mortar bank locally so that I can easily deposit checks I receive and cash in the coins I accumulate. I make sure I keep the balance above their minimum and that irritates me, but one month’s fee for not doing so would negate any interest I might make on that money elsewhere… for several years. I call this bank Feegions. (Your southern readers will know which bank I’m talking about.) They are only slightly worse than any other local bank I could choose. I sort of inherited this checking account when my father died several years ago and he had little choice as they were the only bank in his small town. I was on it so I could pay his bills for him.

    I’m old and it took me years to learn how to use credit to my benefit. You could call me a slow learner. It took bankruptcy to change my way of thinking about many things. And it took years to recover from that financial fiasco.

    The bottom line here is that I have learned (the hard way) to use credit cards and not to allow them to use me or my money.

  18. I take advantage of airline affiliated cards which offer a large number of bonus points for signing up. I pay all my cards off monthly and get free trips, hotel rooms, and other travel-related bennies for free.

  19. Great article! I do cash only and have not had a credit card for more than 30 years, I have no debt either and have lived most of my life debt free. I do have a debit card for ebay purchases. I have never had a car note, let someone else buy a car new and watch the value drop every year so my only debts have been houses,

  20. James Vaughn Avatar
    James Vaughn

    Your views are *not* not normal. If you are not a Dave Ramsey listener, you have came up with the same points he makes on his radio show. You are living like no one else so you can live like no one else. (It sounds better spoken by than it reads written.)

    As someone who is working toward the goal of debt free, yours is the better position and one to be emulated.

  21. Randall Terry Avatar
    Randall Terry

    Dear Ms. Sanderson,

    While I agree with your credit card “myths”, I find your fact about average debt an American dies with wildly incorrect, even after having checked through the sources you provide. Bloomberg’s statement (based on Nerdwallet’s claim of Fed Reserve numbers) that $1.3 trillion dollars in total debt for Americans means with roughly 350 million Americans the “average” debt is about $3700 per person. Per household (4 to a household!?) means $15000 per household and that number is average for living people not dead people. Respectfully, I do not believe your math works.

    That being said, living within your means is a virtue and minimizing interest expense is a big step in that direction. Credit cards can be a path to overspending, but going to a grocery store can be a path to overeating. Both of these things can be controlled through a little personal discipline. Deferring purchases that can be deferred lowers your cost of living.

  22. Editor Avatar

    If everyone used the same good sense as you it wouldn’t matter if they used a credit card or not. It’s the underlying behavior that really determines financial health, not the instrument used to make transactions.

  23. HillbillyHank Avatar

    Enjoyed your perspective and agree. However there are some real advantages to Credit Cards: free use of $1000s of dollars for 25 to 30 days, 1 to 3% cash back each month on everything you purchased, return of your money if merchant’s product/service is not rendered, & a nice inventory of your monthly spending. Of course this assumes that you have bulletproof credit rating, you have annual fees waived, have a cash back card, pay off your balance monthly, dispute charges in writing within 30/60 day of showing up on your statement. Bottomline, credit cards are free, makes me money, transfer liability from me to merchant, and are dog gone convenient! BTW: the credit card companies hate people like me. 🙂

  24. Congrats on your choices in personally managing your finances this way. It takes discipline and I believe that it does limit your spending. That being said, I do have one point to nitpick on… You said that for every person that pays off their balance in full each month, there are 100 that carry a balance. Actually, those that pay off their balance monthly. A quick google found several articles. It varied depending on what year and exactly how you measured, but generally, 30-50% of credit card users pay off their balance each month.