I would put the benefits under two general headings: eliminating unnecessary sources of aggravation, and avoiding doing business with people, or businesses, I don't trust.(snip)
I also have a low threshold for aggravation, however, my personal experience is that there has been almost zero aggravation with my CCs (one small wrong charge, cleared with one phone call), and some simplification (see samclem's post - float = convenience). The net is LESS aggravation with the CC, and rewards on top of that (thank you AMEX and Visa).
In response to a remark by I-forget-whom earlier in the thread, I was trying to give advantages to being credit card free that are applicable to people in general, and I think avoidance of unnecessary aggravation does. But there is another factor that applies to me individually that enters into my decision here. One thing I know about myself is that I can be absentminded/easily distracted, which occasionally results in my forgetting to pay a bill until after the due date. I've done this with my mortgage, utility bills etc. When I paid my mortgage late, there was a one-time penalty, but the mortgage company didn't raise my interest rate sky high for the remaining life of the loan, which I've heard of credit card companies doing under similar circumstances. The likelihood that at some point I would shoot myself in the foot in this fashion makes the reward less (because the penalties would wipe out part or all of it) and the potential aggravation greater for me than they might be for someone else. The aggravation I avoid by not having credit cards is not only with the credit card company but also with myself for incurring the late fee, added interest expense and so on. I just prefer to eliminate that possibility before it occurs.
OK, but if you extend that to all lines of business, you probably need to live in a cave. As long as I pay in full and on time, I am not exposed to that side of things, and that's good enough for me. But to each their own.
I am a confirmed introvert. Living in a cave is fine with me, as long as it's dry and there are no rabid bats <g>. Seriously, though, it's something I have thought about. When I'm thinking about how to invest my retirement portfolio, one side of me says "go for the index funds, with low expense ratios", but the other side asks "how do you know there isn't profit from cigarettes, or gambling, or other stuff you don't believe in, in that index fund", and in fact I don't know. If it's a really broad index, there probably is. It's not one of the options in my 457 plan at work, but when I retire and roll that money into an IRA, I could switch over to a screened fund that excludes companies that deal in tobacco, gambling etc. The problem is the expense ratios on the funds that use the screens I would want are up over 2%. Am I going to walk the walk, or just talk the talk? That remains to be seen, but avoiding credit cards seems like a no-brainer to me. To paraphrase St Thomas More: "It profits a man nothing to give his soul for the whole world....but for
1%?"
That's heading number one. As for heading number two, I have mistrusted credit card companies ever since the bad old early 80's when I was making barely enough to live on, and getting credit card offers in the mail one after the other.(snip) I have no desire to do any business at all with companies that, if this thread is any indication, have no qualms about overcharging, sneaking extra amounts onto the bill, changing the payment due date, generally fleecing their customers any way they think they can get away with and then lying about it afterwards; I don't want "rewards" that come out of the profits they make by use of such practices; and I don't believe in knowingly dealing with dishonest businesses.(snip)
Now you lost me. Aren't Visa and Master Card the bad guys that you don't want to do business with? And those rewards are profits from dishonest practices? Why is it OK with a debit card and not a CC? People run up fees with Debit Cards too - just overdraw your bank account on one and watch the fees pile up ( a
teachable moment for my son).
-ERD50
I guess it isn't strictly logical, but I've never thought of using a logo-bearing debit card as doing business with the credit card company, but as doing business with my bank, the same as writing a check or using my non-logo bank ATM card back in the day. The money comes from my checking account not a loan, and when I get the statement, it doesn't say "Visa" on top, it says "Bank of America". It's the credit card operation itself, the aspect of the business that promotes debt even to the detriment of the customer, and benefits from what I consider to be quasi-predatory lending practices, that I want nothing to do with. AFAIK, my bank doesn't engage in that sort of thing, and if I found out they do, I'd switch banks, or to be even more emphatic about it, change to a credit union.
But you do have a point, asking where the money for the airline miles comes from. I had never really thought about that. I think merchants pay a fee to Visa or MC, and I don't think there's anything objectionable about that. If Visa or MC nudges me to use my debit card instead of cash or a check, by giving me part of the money they get from the merchant as a result, I don't have a problem with that either. You only get half as many miles per dollar spent as with a credit card, and maybe the lower incentive with debit cards is because the companies only have the revenue from merchant fees to incentivize debit card users with, while with credit card users they also have the profits from their more ethically questionable practices. Still, you raise an issue that I had not taken into consideration. I have been thinking about switching from the air miles card to a debit card with a "keep the change" option (it rounds up purchases to an even dollar and puts the difference into your savings account). The ticket you get with the air miles card is not really free, because there's a $30 annual fee for that card. It took me three years to amass enough miles to get a ticket, so if I had used my miles it really would have been a ticket that cost $90 instead of $225. But when I was planning a trip recently, the tickets that I could get with my air miles didn't fit my schedule, so I ended up paying for the ticket out of pocket instead of using them. If I had used a "keep the change" card for three years I probably would have had enough in my savings to pay for the plane ticket, especially if I had paid myself the annual fee too (there is no fee on the "keep the change" card). So I've been thinking about switching anyway, because the other card may be a better deal, and wondering whether the air miles aren't at least paid for out of dirty money may just have tipped the scales that way.
I don't really disagree with penalty fees as such. If I pay late or overdraw my account, I think the other party, whether bank, credit card company, mortgage holder or utility, is justified in penalizing me. What I find objectionable is if these other parties manipulate the situation to
cause the generation of late fees and penalties. For example someone mentioned changing the due date without notice. You said IIRC that you had your credit card bill set up with an automatic payment, and it could suddenly become "late" if the company moved your billing date up a week without telling you as described earlier in the thread. That's a swindle. I've heard of banks that have chosen to pay checks in a particular order in order to increase the number of overdraft fees they collect. (Here's what they did: suppose you think you have $1500 in your checking account, but due to a math mistake, you actually only have $500. You write a check for $800 for the mortgage, $50 for the gas, $50 for the phone, etc etc. The checks all show up at the bank, and even though you actually have enough in your account to cover all of them except the mortgage, the bank puts the mortgage check first, ensuring that all of the checks bounce instead of only one.) That's another swindle. It's money from swindling that I don't want.
Last year I noticed a charge of over $12. I checked the last few months and there were these small charges of around $1. WTF. So I called them and basically was told that 5 months ago we were late with a payment and so were charged interest on the next 6 months. The only reason I noticed it was the previous month we had purchased appliances and went on our annual holiday. Needless to say I was not happy and asked where that was in their policy. On the back of the statement in tiny print of course. The kicker was that it was listed on every other statement, not even monthly. I know that we are a little lax BUT we are modest spenders and don't really look at the fine print. I thought we would be paying interest on that month not for the next 6. But those are their rules and I made sure that all my friends knew about them. I really pity people who do not have financial management skills and the increaslying predatory practices of the market place. There is an ugly side to competition and the free market. I knew I was in trouble when I had to listen to a "value added" infomercial for an electric toothbrush from my dental hygenist on a portable DVDas we were waiting for the freezing to take effect. She sheepishly told me that the "doctor" was encouraging all their staff to do so. I didn't even change dentists because I think it is the sign of the times.
