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Lies We Tell Ourselves To Keep Our Credit Cards

By Steve Stewart

People love their credit cards. Why? They aren’t valuable, can’t be traded or sold, and cost people money and often their freedom. I’ve been separated from my credit cards for over seven years and can tell you that I don’t miss them a bit. Now that I’m coaching people through their debt problems I get to hear all the same lies I used to say that justified my reason for keeping the plastic crutches.   Do you feel a shiver in your spine when you hear these lies people say so they can keep their credit cards?   “I only use my card for things I’m already going to buy anyway.”   I am going to quote something you’ve already heard but don’t think applies to you: People who spend with plastic spend more money – some studies say 12 – 18% more. To add more insult to injury, a study from two MIT professors showed people with credit cards were willing to pay twice as much for Celtics tickets as a group with cash. I will concede that there are people who really do spend the exact same amount on credit as they would with cash. But I ask you, why deal with a middleman in Massachusetts, a big bank, when these people with absolute self-control over their spending could manage their debit card just as well ?   Tell the truth, we have all overspent when using plastic. Go to cash because OPM will never feel as powerful as the money in your investment accounts.   “I only use this card for the points.”   While there is a slight benefit to this excuse, it is not a good reason to keep using credit cards. People really do believe they are getting ahead financially when they get cash back from Discover Card. What they don’t realize is they have been paying 2-3% more for all the items they have bought, everywhere.   The average credit card swipe fee is between 1.93% for gasoline and 3.03% for restaurants. Merchants aren’t just going to sit idly by and soak up the expense, they are going to raise the price of their stuff or shrink the size of the product so they can hit their profit margins. This isn’t dishonest or shifty; it’s what keeps their doors open and the new products rolling out.   Unfortunately this affects everybody, even cash buyers since most retailers don’t offer cash discounts. Using credit cards are costing you and your neighbor money, no matter what your cash-back offer is.   “My credit card interest rate is blah blah blah.”   The moment somebody tells you about their great low interest rate you can bet they are in debt. Why? Because people who pay their credit cards off every month don’t get charged interest. This is justification for their overspending, and it is hazardous to their wealth.   Don’t feel sorry for them – help them out. Tell them that debit cards have even lower interest rates, zero percent, and are accepted in more places than American Express.   “Debit cards aren’t safe, but my credit cards are.”   Why are the only technological advancements being shared publicly about new iPhone features and changes to Facebook’s Privacy Settings? We have men on the International Space Station 24-7 for Heaven’s sake! You can’t tell me that fraud protection hasn’t improved and the same tools for credit transactions don’t apply to debit. I think those issues were solved back during the Y2K upgrades.   Debit cards have the exact same Zero Liability Protection as credit cards, Visa says so on their website.   Don’t believe it’s true? My wife and I both had our personal debit cards and my small business debit card compromised within a 15-month period. In each situation the banks contacted us within hours of the fraudulent activity and reversed the charges. However, a relative had her credit card compromised. The company told her to contact the business where the charges originated and fight with them. That’s stupid!   THE VERY INDUSTRY THAT TOUTS THEIR ZERO LIABILITY POLICY WILL PROTECT YOU FROM FRAUD DIDN’T STAND BEHIND THEIR PROMISE!   Our banks wanted to keep our business; her credit card company didn’t give a squat about her. Who’s safer now Citi?   “My credit score will suffer if I go to all cash.”   Nobody is telling you to damage your credit score. Guess what? Cutting up your credit cards and closing the accounts will not cause you to have a bad credit score. Those who preach using debt as a tool and that you need to “build your credit score” are sending the exact same message as I am in regards to behaviors that will cause you to have a good score: Pay your bills and debts on time. That’s it. You will have a good credit score if you simply do those two things – regardless of the number of credit cards you have!   I would submit to you that the credit scoring system, headed by Fair Isaacs Corporation, is a one-sided measurement of debt. Don’t believe me? Take a look at your credit reports and see if there is anything missing. Look closer. Did you notice your rent, cell phone bills, and the money you send to Comcast every month aren’t on there? They aren’t listed because they are not debts. How can a system that is supposed to prove you are credit worthy not include some of the most common monthly bills? Fair Isaac isn’t really fair, are they?   The result is a student that paid his way through college and received his car as a graduation gift is now being told he’s not credit worthy. It’s a good thing there is a company out there called eCredable that can prove our credit worthiness and has the law to back them up. For more read the Equal Credit Opportunity Act Regulation B.   I’m not asking you to go to all cash. What I am saying is we have to stop lying to ourselves that credit cards are good for our finances. Support your local bank by using their debit card and keep swipe fees away from the big banks. Your small business owner will thank you and your community will be stronger because of it.   What are some of the excuses you hear your friends say that make them keep their credit cards?

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