You might benefit from using credit cards because you really don’t need them, but that isn’t the average person. Many people have become credit card junkies because that’s essentially what the card issuers are going for. Buy now, pay later. Easy monthly payments. Periodic increased credit limits. Skip a payment. Zero interest for six months on balance transfers. OK, so the last three are practically history now, but I think you get my point.

The idea of paying by credit card-for what ever purpose-is a contradiction in terms if the point is to gain greater control over your finances. The credit card system is set up to facilitate sales and earn money for the lenders, not as a money management tool for the borrower.

If you pay by cash, check or debit card, there’s far less chance of a debt overhang than there is with credit cards.
.-= Kevin@OutOfYourRut´s last blog ..Ten Ways to be More Productive in Business and on the Job =-.

After the great credit boom of the past 2-3 decades, people have been twisted into believing that credit cards are some sort of money management tool for the customers benefit. Nothing could be further from the truth. They’re to facilitate our buying things (that we often can’t afford) and so that the banks can collect fees on both sides of the transaction for extending us the priviledge.

This post looks like it was exhaustive to write but it’s right on the money. Well done!
.-= Kevin@OutOfYourRut´s last blog ..Ten Ways to be More Productive in Business and on the Job =-.

To elaborate:

All any of us can do is change everything we dispise at ground zero… ourselves. If all of us do this it effects global change. More importantly it effects change in our country, state, community, church, and family.

It’s when it comes to business that, in reality, my position will likely not have an effect. I tend to look at this as a realistic point of view, rather than pessimistic or apathetic. It’s a problem with greedy, irresponsible, and uninformed people that creates a credit mess. For as long as we’ve been on this earth, these three types of people have been with us. Unfortunately, they make the world a harder place for many of us to live in. But I can’t change their hearts. They will do as they please.

It’s too bad that so many people think this way.

My bank, USAA, actually requires me to have a credit card for a very understandable reason. It’s branchless banking. I don’t take my checks to the bank to make a deposit. I simply scan them in on my home computer, or use my iPhone to deposit them. As you can tell, there is a high risk of fraud here since the money is available immediately. I’m definitely okay with having this card (which is my only card) for the convenience of scanning my own checks and having the money available with no wait. The credit card gives them the opportunity to charge your card if you deposit a bad check and spend the money right away.

The rewards program is amazing. My wife and I will be able to travel nearly anywhere in the world by our 5th anniversary because of our rewards points.

Unless I can find millions upon millions of people that are willing to join me in overthrowing the credit industry, I will continue to use credit cards responsibly. Like prescription drugs, only people that abuse it will be negatively affected by it on a personal level. On a global level, I alone can make no difference.

My rewards program is truly free money, since I am subject to the increase in product cost whether I use credit or not.

GOP was mentioned – I would like to say a few things about that.

I am affiliated with neither party and am aware that the entire Republican/Democrat “two-party” debate is utter hogwash. It is nothing more than a distraction to keep the American people occupied while the important issues continue to occur seamlessly, regardless of party, and with no media coverage.

To prove the point… Dems have not reversed any of the financial industry changes the Rep party made while Bush was in power. Quite the contrary, they have expanded upon the mistakes.

I am neither Republican or Democrat. I am American, and both parties are full of stink and their corruption is as rottenness in the bones of our “Republic.”

Thank you for your great and thoughtful comments.

I’m glad you recognized it early and are turning things back around. Nice work.

I only wish these types of stories received the same type of exposure as the credit card commercials do!

When I signed up for the card machine, it was free registration/credit check. The monthy fee was $25 and they took 2.5% of the total sales price under $1,000. Over a three yer period they added an annual $120 fee, plus a monthly fee of $60, plus the swipe rental for a another $40 a month and they started taking 5% off the total sale. In addition, if I wanted a paper statment rather than an e-statement – they charged a $15 courtesy fee.

From a personal standpoint, I have had an ongoing dispute with unauthorized insurance premiums added to a charge account. The bank mouthed off, so I paid in full and closed the account. Long story short here, the bank allowed additional unauthorized charges to be added to a closed/paid in full account then hit with predatory fees. Elizabeth Warren would have a field day with my paperwork on this because to date over 33 months, the bank has violated TILA for a total of 234 counts.

The banks count on people either not having the knowledge to fight them, or the time.

It seems to me, that if Americans could pay their bills, the recession would not have happened. Period.

The “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” passed into law as Public Law 109-8: See

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ008.109

While, in an abstract way, freeloaders SHOULD be stopped from leaching on our system, this law disregarded a 2001 study of the American Journal of Medicine that showed that in the 5 states that participated, medical problems contributed to at least 46.2% of all bankruptcies.

This number grew even worse in the six following years: “Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income.”

Both of these statistics are from the American Journal of Medicine web site, http://www.amjmed.com/article/S0002-9343%2809%2900404-5/abstract

In short, the bankruptcies I cited above were not caused by irresponsible credit abusers, for these people, the choice was either Bankruptcy or Die. The premise of this new law was flawed from the very beginning.

What this law actually tried to accomplish, was lowering the amount of risk for a given loan, because most borrowers couldn’t escape. They would become the equivalent of 21st century share croppers, working for the banks to be allowed to live on a piece of land.

In my humble opinion, THIS is the point where the sub-prime lending increased exponentially.

This is the point, where the moose lost their natural protection, and the wolves gorged themselves on the less fit until their food supply could no longer maintain them. By either natural selection, or Adam Smith’s laissez faire ideals that the GOP has espoused for years, the banks that were in trouble should have been allowed to fail. Whatever system emerged to fill their niche would have been stronger and been a more responsible part of our common economy.

I suspect that you, and every other reader of this blog, is one of the financially fit who are coming through this economic mess with nothing worse than a few scars on your portfolio, and I salute you all.

I don’t want to start an argument with you, or anyone else. My goal in this comment is simply to explain my opinion. Every single expert on the subject agrees with you, and would consider me daft. However, I honestly expect that the text books our children will read when they grow up and go to college (the ones who can afford it) will support, to some extent, my point of view.

As to “predatory lenders,” reread my observation above about those “0% interest” checks against my Visa account that Chase bank was nice enough to send me LAST WEEK. Their choice in applying my payments to the 0% portion of my statement, while allowing high interest to accumulate on any other charges to grow, combined with the “finance fee” on top of this, makes their offer very very close to being a flat-out lie.

The banks are still predators, and we are still their food, and without government protections, our next “Great Recession” is already beginning to form.