Rather than make a list of all the reasons to avoid credit cards, I’ll give you a few big reasons why I think you should avoid snakes…errr…credit cards…and, if they aren’t enough, feel free to ask me to keep going.
I don’t have the discipline to control my spending with a credit card like I do with cash.
When I hand someone a $100 bill, there is an emotional change I go through. Swiping a card doesn’t do that. Thus, I’m going to spend more on plastic (and research shows this is true for all of us).
If I make a purchase with cash or with my debit card and I don’t like it, I can still return it to the store or find some way to get my money back.
Credit card companies have long hailed their “purchase protection warranties” on purchases made with a card, providing a safeguard for you if you want to dispute the charge or return the purchase. In fact, card issuers will sometimes extend the warranty on certain purchases. I’ve never had a problem returning something I bought as long as I tried to do it according to the rules. I’m sure there is some sort of benefit to that piece of card ownership, but I bet a quick poll would bear out that this is a rarely, if ever-used benefit.
I worked for a credit card company – I know there are lots of pitfalls.
I know that 29% interest is pretty standard fare for credit cards. I know that $35 late fees await anyone who misses a payment, even if only by a day or two. I know that payments get lost in the mail, credit scores get damaged, terms change (never for the betterment of the customer), and I know there are lots of other things you have to watch out for as a consumer. Cash keeps it pretty simple – you see the price of something, you count out the right number of bills to pay for it.
As far as the perks and points and miles, etc., I think I’ll be okay without them.
They are a legitimate benefit, but are you going to beat a system that makes billions of dollars annually in revenues off of interest, late fees, etc.?
So you don’t feel I’m being too much a hypocrite, I will admit I do have a credit card. Yes, you read that correctly – I own and periodically use a card. I keep it in the drawer at my house because occasionally I’m asked to make HUGE purchases in some of my work for things I may order online or business travel I go on ($10,000 in a month isn’t out of the realm of possibility). I don’t want to have that huge chunk out of my checking/savings accounts so I charge them and pay them off immediately with the issued check from work. I NEVER make any other purchases on the card beyond this.