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Why I Don’t Think Credit Cards Are All Bad

June 16, 2014 by

Credit Card

Years ago, before my husband and I had children, we had debt. Lots of it.

We had the mentality that if we could afford the minimum monthly payment, then we could afford to purchase the items we wanted. We drove a very nice, brand new truck with a $400+ payment because, well, we could afford the payment.

Then we found out that we were expecting a baby.

We were in debt, still renting, and not in the best financial position to be caring for another human being.

At my dad’s suggestion (thanks, Dad!), we went to a credit counseling service. They told us that if we never charged another penny and continued making the minimum monthly payment on all of our cards, it would take us 30 years to pay off our debt!

That was the wake-up call we needed.

We handed over our statements, did everything they told us, took every budgeting class they offered, and paid our credit card debt sooner than we had ever imagined. It wasn’t easy. We moved in with my husband’s parents, he got a second job, and every single dime went to paying off those cards.

You can imagine our surprise when upon graduating, our credit counseling service told us the first thing we needed to do was go get credit cards so that we could rebuild our credit.

We were shocked, and frankly, terrified. I never wanted to touch another credit card as long as I lived after what we had just gone through.

We did, however, follow their advice. We got a credit card, charged a small amount each month, and always paid it off early.

Years later, we found ourselves with another child and a mortgage. You can imagine my fear and trepidation when my husband came home from work one day and told me that his business partner charges all of his monthly expenses on credit cards, pays the balance in full each month, and receives cash rewards (thanks, Rick!)

The thought of that frightened me, but I agreed that we could give it a try. I was already using Quicken to track our spending, expenses, etc. I continued to track our credit card spending as if we were using cash.

There is a great debate out there regarding the best financial system.

Many people shun credit cards completely, working on a cash only system. They propose that spending cash is much more concrete than swiping a card. In other words, handing over green cash is harder so you are likely to spend less.

They also suggest that you are more likely to blow your budget when you charge rather than pay cash because once the cash is gone, it’s gone. Credit cards allow you the option of overspending.

They propose that many people do overspend as a result, and they are probably right. Many financial planners teach that the need to build credit is a myth, and that one can be an active participant in society without credit.

It has been more than ten years since my husband and I started paying for everything possible with credit cards. In that time, we have made money that we wouldn’t otherwise have had we been using a cash only system.

I don’t believe that we overspend because we don’t charge anything that we don’t have the cash in the bank to cover. We spend only what our budget allows because we treat our credit cards as if they are cash. We have never paid a late fee or one cent of interest.

For us, the system works well because we don’t use credit cards to purchase things we don’t yet have the money for. Nothing goes on the card unless we know how and when it will be paid back.

I think that this issue is an individual one.

The decision needs to be based on how well you know yourself. If you are self-disciplined enough to purchase only the things you can afford and stick to your budget when you are shopping, then credit card rewards can work in your favor.

You need to keep in mind that messing up, just once, can more than take away any advantage these cards may give you. You can be sure the credit card companies are banking on the chance that you will.

Click here for more information or to purchase Quicken from Amazon.

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What do you think? Leave a comment and let us know if you think you spend less because you use cash, or do you think the benefits of reward cards outweigh the risk?

Shared at The Retro Re-Pin Party.

15 Responses to Why I Don’t Think Credit Cards Are All Bad

  1. Rick

    And to fill in the blanks of your cc journey Heather, by the two of you becoming good stewards of the income God provided and treating it as His, you were able to have a mortgage! You went from minimum payments on high interest cc’s and renting, to buying a home which produced equity enough to help fulfill the lifestyle dream of living where you do now. You have a strong marriage, loving children, and your lives are all centered around a fully engaged relationship with Christ Jesus. Who knew just how critical getting a handle on your finances could be and how far reaching it’s effects are in every area of our lives? Jesus speaks a lot about money in the scriptures and it’s not about having or not having… it’s about being faithful with His resources! His abundant joy has no price tag attached to it!

    • Heather

      That is a very good point! Thank you so much for sharing that thought. It is so true that being faithful (or unfaithful) in one area of life spills over into other areas. Thank you for being such a great example to us.

    • Heather

      Thank you! We learned our lesson well. It’s one that we do not wish to repeat. I hope that by sharing our story, we can help and encourage others.

  2. Joyce

    We too have two credit cards, and they seem to be a blessing for the protection we get when we purchase an item. Yet, as the bible says….”The borrower is servant of the lender.” Sigh….

    • Heather

      I think the important thing to remember is that Jesus taught about the condition of our hearts. Yes, the borrower is a servant to the lender (one reason I can’t wait to have our mortgage paid off!), but I believe that when it comes to most things, the condition of the heart needs to be considered. If we are covetous and spending money on things we know that we cannot afford, that might be something we want to reevaluate. Using credit cards responsibly as a tool with a goal of healthy stewardship can be a positive thing when the heart is in the right place. At least, that is my opinion. If you have the funds to pay cash for the item when you charge it, you aren’t a slave to the lender, right? Thank you for the reminder of that verse. I also think of the Romans 13:8 verse that says we should owe no debt to anyone, but a debt of love. Thanks for the good discussion!

  3. Joyce

    The question was what we think of having a credit card. As I said before, to have a credit card IF we have self control can be necessary thing. You cannot even rent a car without one…we have tried. You cannot even get medical care in some instances if you do not have credit card good standing. You cannot rent an apt or home without one. If you have bad credit you cannot even get a card. I think that often the Lord is far more concerned about His people walking in love and compassion than having a credit card that is used wisely. Maybe the answer is to move to Alaska or some country where you live off the grid totally.

    • Heather

      I couldn’t agree more – the Lord is far more concerned about His people walking in love and compassion than anything else, and I often dream of living off the grid completely. Your thoughts on having credit cards for car rentals and other important things are so true. This is why I don’t understand how financial guru’s (like Dave Ramsey, who I really like and agree with most of what he says) state that one doesn’t need credit cards or credit at all. I’m not sure how he deals with the situations you mentioned. Like I said, it’s an interesting discussion. Thanks for sharing your perspective. In the end, we should strive to do all things in love so that He is glorified in how we live our lives. It’s difficult to be in the world, but not of the world at times, isn’t it? Personally, I cannot wait for His return and eternity with Him when we won’t have to worry about any of this stuff. Blessings to you, Joyce.

  4. bonniesteinborn

    I am just sorry you had to learn this credit lesson the hard way. But, praise the Lord you are able to share your expertise now and help others. That is wonderful !
    We do need that good credit rating if we want to be good examples of GOOD STEWARDS – of all that God has allowed us to share:) It is also nice to have if we need an emergency loan:)
    Keep up the great example:)

    • Heather

      Thank you for your encouragement, Bonnie. I think it is important to try to help others not repeat our mistakes, if they are willing. Sometimes we learn the most when we fall the hardest so I am glad for the experience now that we are on the other side.

  5. Laura

    This is exactly what we do. We charge almost everything, we pay the balance in full each month, and we enjoy the rewards. It’s how we earn air miles. I do keep some cash on hand for small expenditures (and in this season, for garage sales!)
    The other advantage of paying with credit card is that returning merchandise is simple. Most retailers have a “look up” system using credit cards. Also, any major purchases have a built-in warranty with our major credit card.
    Love the blog. I found you through assortmentblog.

    • Heather

      Welcome, Laura! I’m so glad you found the blog. You brought up some very good benefits that credit cards offer. Thanks for the input.

  6. Gennie

    Thank you so much for sharing this at the Retro Re-Pin Party! We do exactly what you do–charge almost everything and pay the balance in full each month. But we LOVE the rewards. We earn Amazon cash back and are thinking of starting to do it with travel rewards instead. We literally paid for almost everything for Christmas last year getting gifts on Amazon with our cash back. 🙂 These are great tips!!

    • Heather

      We LOVE the rewards, too! It is nice to receive a bonus every once in awhile. Thanks so much for the encouragement and for hosting, Gennie. I really appreciate it.

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