Is a credit card a necessary evil? - Page 2

[pumpkin]

I think credit cards are mostly a convenience. I also think they are an absolutely necessary safety tool. As soon as DD is old enough to be exploring the city on her own she will have a credit card in her pocket. Car breaks down and need a tow? Date gets obnoxious and you need a cab home instead of feeling pressure to have him drive you home? Freak snow storm hits and you need a place to stay? Sure you could always have a few hundred in your wallet, but I prefer to carry minimal cash.

[HollyBearsMom]

I don't think of them as "evil" but I do find them necessary for our particular lifestyle. In our case the debit cards are also credit cards and we have one "emergency" real credit card with some kind of insane limit ($50K).

Couple examples:

• We have family that is far away that we visit a couple times of year.  Sometimes this involves renting a car, booking a flight or staying at a hotel. You need a credit card for the car, to get the best deal on hotels and flights you need to order on line and a CC makes that easier. Even if you book over the phone to guarantee a late arrival at most hotels you need a CC.  Now we don't actually use the CC to pay for the car or the hotel room, we pay cash but the CC secures it.  For the flights I use the credit feature of the debit card and it comes right out of our checking. 

• My son often need things for his SID that I can not find in local stores or are just way too expensive to buy locally. Using snail mail to send a check takes way too long.

• I am bargain hunter  and will research the best deals, etc. These are often found online. When I see an amazing deal I don't want to lose out. Being able to grab it when I see it online is great.

[Drummer's Wife]

We have rented cars, tons of hotel rooms (two different ones last week), and bought airline tickets all with a debit card. Just mentioning that b/c I've read it on here several times that you can't do these things w/o a credit card, and it's simply not true. We've never even had a hold or deposit taken out. I also shop online on a weekly basis (95% of our Christmas shopping was done online).

Now, I do totally see how credit cards would be helpful in emergencies... but they certainly aren't necessary, and I have zero desire to have one myself.

[Knittin' in the Shade]

We haven't had credit cards in  over 7 years, and our credit scores are fine.  (DH's is darned near perfect, actually!)  We do both have Visa-branded debit cards linked to our checking acct, and have used those with no problems to rent cars, hotel rooms, and plane tickets with no hassle.

[coyotemist]

No, we haven't had a credit card ever.  We've been married almost 13 years.  Even big things, there are always ways around buying them RIGHT NOW.  Items can be hand washed or taken to the laundromat or a friend or family's house.  Items can be air-dryed.  We can get by with 1 car, but prefer not to (it is rough, I start work at 630, hubby starts at 8:30).

We always have enough for gas and basic groceries, I can't imagine anything I "need" more than the items I've mentioned above.  Most families 30 years ago made do or bought with cash.  I remember the first time my parents used credit (besides their house) was to buy our first color TV.  They swore they'd never do that again, once they figured out how much they paid and didn't again for a long time. 

In this house, it's cash or not at all.

[Smithie]

I use my credit card constantly. It earns cash rewards. I love it.

BUT, my parents went CC free after years of not managing to use them responsibly, and they have had absolutely no problems using their debit card for travel, online purchases, etc. So I would call credit cards unnecessary and a bad idea for anybody who is not confident in their ability not to charge more than they can pay off each month. It's my feeling that most reformed overspenders gain that confidence eventually.

[NikonMama]

Originally Posted by coyotemist 

No, we haven't had a credit card ever.  We've been married almost 13 years.  Even big things, there are always ways around buying them RIGHT NOW.  Items can be hand washed or taken to the laundromat or a friend or family's house.  Items can be air-dryed.  We can get by with 1 car, but prefer not to (it is rough, I start work at 630, hubby starts at 8:30).

We always have enough for gas and basic groceries, I can't imagine anything I "need" more than the items I've mentioned above.  Most families 30 years ago made do or bought with cash.  I remember the first time my parents used credit (besides their house) was to buy our first color TV.  They swore they'd never do that again, once they figured out how much they paid and didn't again for a long time. 

In this house, it's cash or not at all.

Yeah that.  My husband and I have been together for 13 years, and he hasn't had a credit card since we've been together, and I haven't had one EVER.  We use our debit cards when necessary (things that can't be done with cash) but otherwise we use cash for everything else.  If we don't have the cash on us, we can't afford it so we don't buy it. Plain and simple.  If needed, we go home and get the money and come back or we figure out how much it will cost before we leave and take the necessary amount with us.  We have enough medical debt, we don't need credit card debt on top of it.  No sense spending money we don't have.  It doesn't seem right to me.     
 

[velochic]

They're necessary for us, but not evil at all.  We've never carried a balance on our credit cards in 30+ years of using them.  We've never been late once for a payment, nor have we ever had a balance carry over.  Not even for one month.

However we put EVERYTHING on the credit card.  At least everything we can possibly put on there, including utility bills.  The points we earn pay for dd's school uniforms every year.  That's a $300 savings every year in and of itself.  I also have several small kitchen appliances that I got for free using the points.  The convenience shaves off hours of financial planning, etc.

We travel and have lived abroad A LOT.  We've had issues using our debit cards abroad in the past and a CC was absolutely necessary in several European and Middle Eastern countries.  Debit cards just wouldn't go through, even as a credit card.  We just had this happen a couple of months ago when we were in Italy.  I was making a purchase at a grocery store and I had left my wallet with dh and only had my debit card and Euros with me.  I couldn't use my debit card - it wouldn't go through and I had to use the cash (which was fine, I just didn't want to have to go do another ATM withdrawal).

If we have a major purchase, we save ahead for it, but we still put it on the credit card, then pay the balance.  That way we get our points.

I also like the fact that you can dispute charges and it doesn't affect your bank balance when you use CC.  We had a credit card number stolen once and they had spent almost thousands in a single day (charges in Dubai and Moscow, airline tickets purchased, etc.).  The charges were flagged by the company and the charges didn't go through and we were out no money at any point.  I can't imagine how that would have panned out if we were using our debit card and they got that number.  We NEVER use the debit card online.  Never.  And we try to not use it as a credit card, if we possibly can avoid it.  The safety factor is just one reason.

For us, the CC is absolutely necessary.  It is in no way evil, though, because we're good money managers.  I think if people have a hard time using the cc wisely, then it's not good to carry around.  I think they are still necessary, but can be kept, as a pp mentioned, in a safe or frozen in a block of ice or something like that.

Edited by velochic - 1/13/11 at 6:40am

[TiredX2]

Originally Posted by JessicaRenee 

We each have a credit card for credit but we don't use them a whole lot. I'll use it for groceries or gas and pay it off that same day so I'm not having o pay interest.

I just wanted to address this.  You don't have to pay it off the same day to avoid interest.  As long as you are not carrying a balance, you are not charged interest.  So, I charge a multitude of things and then once a month get a credit card bill.  That bill has a due date (generally a couple weeks in the future).  If the balance is paid in full by that date no interest is charged.  So, I pay our credit cards once a month and never pay interest.

[SilverFish]

like velochic, our entire lives are on our credit cards. utilities, bills, everything. we love it. i think it's just as easy to be financially irresponsible with cash (except then you literally don't have any money for food or bills at the end of the month). good money managers don't have financial crises no matter what method of payment they prefer, poor money managers are going to come up short no matter what. our cc limit is so high we could practically buy a car with it, but it has never even crossed our minds not to pay off the balance each month. plus, the financial rewards are pretty high when you use a credit card for everything... we are taking a weekend trip in a few weeks and is mostly being paid for with points.

[sonrisaa29]

I had my debit card numbers stolen twice from a store and once online. Debit Cards are super hard to dispute charges on. I've had holds put on my debit card for hotel travel and rental car. growing up my family and I got to go on numerous free vacations because of points that my father gained using his credit card for business .
It would make me nervous to carry around large amounts of cash for emergencies. At Least if I lose a cc or it gets stolen then I can dispute it where as with cash.I'm just screwed

[weliveintheforest]

I don't think they are necessary but they are useful in some situations.  I don't have any atm, but I will eventually get one again to use occasionally.  You need one for paypal if you want to use instant transfers, and they are very handy for travelling and things like that. 

eta: I'm in Canada, where debit cards do not work the same. I might just use a debit card if I were in the USA

[Smokering]

We didn't have one for the first few years of marriage. We eventually got one for ease of buying things online, with the minimum limit ($500). DH also has a business credit card now that he's started his own business.

For us, it's never been a problem. I find it a slight hassle to have both credit and EFTPOS cards, and usually use the latter - I could live quite happily without a CC, although I do occasionally order pizza online with it. But we've never not paid it off in full, and it's apparently better for your financial track record to have a history of paying off your CC promptly, rather than a history of not having a CC at all (which seems crazy to me, but OK!). So... meh. Like a PP said, I don't see it as either necessary or evil. But if you have issues with spending money you don't have, then yeah, avoid them like the plague!

[texmati]

Originally Posted by SilverFish 

good money managers don't have financial crises no matter what method of payment they prefer, poor money managers are going to come up short no matter what.

I think this is sort of discouraging to the op. If getting away from credit cards helps you manage your money better; it's a change worth making; just like writing down what you spend, or anyother habits like that.

[SilverFish]

Originally Posted by texmati 

Originally Posted by SilverFish 

good money managers don't have financial crises no matter what method of payment they prefer, poor money managers are going to come up short no matter what.

I think this is sort of discouraging to the op. If getting away from credit cards helps you manage your money better; it's a change worth making; just like writing down what you spend, or anyother habits like that.

well, i guess it sounds kind of harsh, but i think it's realistic. if you don't work on changing your financial habits, i really don't think it matters whether or not you have a credit card or not. sure, cutting up the credit cards for a while might help break a cycle and might be part of your road to financial security, but i think it's putting the blame on something inanimate to refuse to use credit cards. if you don't look deeper and address the root causes of your financial problems, everything you try is just going to be a band aid solution...
 

[2lilsweetfoxes]

I had a rewards credit card which we paid in full every month with my mid-month paycheck.  (I got paid twice a month --about $1500 per check-- on the first and the fifteenth.  The paycheck from the first went to rent.  We put everything else on the credit card and paid it with my check from the fifteenth)  Well, we decided to switch to me being paid once a month (on the first).  We have a balance of just under $2000ish on the card.  I don't get that midmonth check I was expecting.  And my first of the month paycheck is was $1500.  I put more on the card just to keep a positive balance in our account.  Then, the cost of gas skyrocketed and we lived a 30 mile round trip from my work.  I started using the card to make up the difference between our cost of living and my paycheck.  Plus, we stopped putting everything on the card with the intention of paying it off.  So, I was having to find money to pay the card while looking for money to pay for all our expenses--and more kept going on to cover the difference on COL and paycheck.  The balance ballooned up to about $8000--twice my monthly salary.  At 29.99% interest, I was barely able to pay it, so I opened another card to transfer the balance.  I was only approved for half the amount.  So, I transferred half the amount--then the first card cut my available credit to about $4000.  So, now I had practically no credit.  DH had no idea we even had an active credit card.  I opened a third line of credit to buy Christmas presents a couple years ago...and a military store card "for uniforms"--which I maxed out on junk and only spent 25 cents on the uniform part.

3 of our 4 credit cards (the original card, the military card and the christmas LOC) will be paid off by the end of this month/beginning of next month when we get our tax return.

ETA:  we've started working a budget and a modified Total Money Makeover.

OP--figure out your expenses bare-bones (cutting cable and everything if necessary) and then multiply it by 3 and shoot for saving that amount.  It will be two steps forward, one and a half back (ie, you get $1000 saved-yay you!- then the car needs repairs to the tune of $750, but you won't have needed to put it on credit.  And if the repairs are to the tune of $1200, well, you only need to come up with $200.)

As for vacations--if you need to put it on a card, then you can't afford the vacation.

[newbymom05]

I love our credit cards and consider them necessary. We mainly use a Costco AmEx which pays 1.5-3% cash back, depending on the purchase category. So far we'll get back over $350 this year. (We had some big medical costs this year, usually we get back around $250) Like other posters, we put everything possible on it. We have a cash-back Visa for places that won't accept our AmEx. I also like those no-interest cards. We've bought several appliances that way. I got a no-interest Discover card to finance some necessary home repairs. We had the money in our savings, but preferred to stretch it out over several months w/ no interest.

I notice some posters equating using CCs with spending $ that isn't there. Personally, we see our CCs as cash, and so never put anything on there that we don't plan on paying off that month, or w/i the no-interest window. I think as long as you have a game plan for your spending, CCs are wonderful tools--I love not having to carry around cash or a checkbook, and I love the perks some CCs offer.

[Stayseeliz]

We use debit cards but not credit cards. If it doesn't come out of our savings we don't buy it. We've paid them off and reopened them and it never turns out well so we refuse to use them!

[Auntie Sapphire]

Originally Posted by Smokering 

it's apparently better for your financial track record to have a history of paying off your CC promptly, rather than a history of not having a CC at all (which seems crazy to me, but OK!)

If a bank is trying to decide whether or not to extend you credit, which will look better to them?

   Person A: history shows s/he pays off debt in a responsible way

   Person B: no information available

Person A is a better risk. Person B could very well be responsible with debt, but there is no data to show this.