I’m still working to pay all that off, but I regularly use my Amex reward card for charging most purchases. I have a lot of my utility bills charged to it and use it for everyday purchases. The great thing with the Amex is that you can’t carry a balance on it, so it forces you to pay it off every month. They do have some “pay over time” programs, but you have to opt in to them and I simply don’t.

Last year, I was able to get 4 round-trip coast-to-coast flights for free (one in first class!) with my reward points. I also managed to triple-dip during some extended travel by first getting a discount on my hotel by using the card, then racking up reward points on the card, and finally getting frequent-stay points in the hotel program. The frequent stay points allowed me to have about 3 weeks worth of hotel stays for free. I even got tax benefits via per-diem employee business expense deductions.

Credit cards are a tool and for some jobs, they are the best tool. A chain saw can hurt you, but you wouldn’t use a butter knife to cut down a tree. Tools are only as good as those who use tthem.

Sure, it would be great if I didn’t have a lot of debt with the horrible interest rate increases they’ve been dropping on us of late, but that’s not the fault of the cards. It doesn’t mean I’m happy with the credit card companies for raising rates to ridiculous levels at a time when the federal interest rates are at all-time lows, but it’s not illegal. It’s just up to me to pay it all off quickly.

Having all that credit available when I needed it was a godsend, even if I’m paying for it after the fact. Without it, I would have lost my house, my car (and any means of getting to work), health insurance, etc…) so I think I’ll keep credit cards in my financial toolbox.

Thank you for taking the time to provide intelligent counterpoints to my article. Here is a brief reaction to the debate section:

Arg1: There is no moral issue w/the freezer industry.
Arg1a: Interchange fees are not a necessary business cost, but a luxury business cost (luxury to use CC’s.)
Arg2: I totally agree – CC’s do not cause personal irresponsibility, they simply provide yet another channel of gross misuse.
Arg3: CC’s are raising minimum payments to sometimes 3x original amounts stretching some people too far (CC users solely at fault for burying themselves, but banks are not interested in “working” w/them, only harassing them for payments that cannot be made.)
Arg4: I fundamentally disagree. I believe we should pay for everything we wish to buy with money we already have (many will disagree… I’m old school). I see the exchange of goods and services as the oil… not the credit.

Great write up Len… intelligent debate is always the way to reach the best answer!

Cheers

Having struggled with credit card debt for many years, I am in the middle camp. I definitely believe credit issuers have become predatory and I am very glad we are starting to see reforms, such as CARD. I also believe many consumers are irresponsible and I feel they should be held accountable for their debts. However, credit issuers are burying consumers with cascading fees and exploding interest rates. And, I believe this is contributing to the rising percentage of defaults and possibly even some foreclosures. Of course, taxpayers and responsible consumers are getting stuck with the costs from these defaults.

Since we cannot enforce federal usury laws upon the states and credit issuers are thumbing their noses at reform, I believe a fair solution would be summary discharge of debt. For example, any debt that exceeds 21.9% interest (the old usury limit) or fees that exceed $25 per month could be discharged with a simple court filing and it would be erased from your credit history. Any debt with interest rates and fees below the limit would be subject existing bankruptcy and credit reporting laws.

This solution would keep credit issuers honest with their rates and fees and allow consumers an opportunity to climb out of debt. But, it wouldn’t let irresponsible consumers off the hook for their debt obligations. Most important, it would be very difficult for banks to weasel around the discharge option with any new fees or rate tricks.

If a store doesn’t want to accept credit cards, they don’t have to. However, most do because the convenience factor leads to increased sales.

So, if you don’t accept credit cards and sell 500 units, but then switch to accepting credit cards and sell 550 units, you can actually partially offset the cost of allowing credit cards with the increased savings due to economies of scale (larger orders, increased production runs, etc).

On a macro scale, the sales would likely stay the same (If I want to buy something, I will buy it eventually when I have enough cash in my wallet). But on a micro scale, this can really be beneficial to competing businesses.

If any company decides to stop accepting credit cards and actually lower the prices by a few percent, that is awesome. But I would bet that they will also lose sales due to the convenience factor alone.

MLR

Thanks again for being so gracious regarding this rebuttal post to your original article.

I have to agree with you about there being no moral issue with the freezer industry. lol

I think the banks that are interested in only harassing their customers are making a terrible business decision – it makes no sense for them to try and get blood from a turnip, as the old saying goes.

Best,

Len

Many many people will find that to be a pi$$ poor excuse and that is fair enough – I understand where they are coming from. Many people believe the solution is to change the laws to stop the predatory practices (as CARD is trying to do) – just be careful, because sometimes these laws can go too far in the other direction, inadvertently increasing costs for “good” customers.