A Necessary Evil?

I’ve heard these phrases more than once. “Credit cards are a necessity of modern life. You can’t survive without them. No one carries cash anymore.”  And, worst of all, “Instant money!”

No, credit cards aren’t, “instant money.”  It’s someone else’s money and they are allowing you to use it—for a fee. It’s called debt.

There was a report on Drudge today that eight million people have stopped using credit cards in the last year. That is a significant number—a reduction of credit card holders from 70 million down to 62 million. 

The AP report appears on one of Andrew Breitbart’s websites. It is written with a particular bias.  In one paragraph it states, “The Chicago company (credit reporting agency TransUnion) found that consumers in the subprime category, or those with low credit ratings, were believed to be without cards mostly because they were shut down by banks after payments fell behind or balances were written off.” 

The AP implies that it is banks that keep low income earners from having credit cards. They imply that banks should continue to provide “free money” to those unable to repay the debt.  

I disagree. Debt, by any other name, is still debt. Folks forget that 200 years ago or so, debtors could be imprisoned or placed into a form of slavery called indenture.  In the early years of the settlement of this continent, England provided colonist by indenturing them, either voluntary or involuntary, to pay for their passage to the New World.  Legally, there was a difference between those indentured and those enslaved.  In practice, that difference was often ignored.

The brief history lesson aside, being in debt is not a positive lifestyle nor is it a productive one.  All your resources are spent servicing your debt and bankruptcy, if it is allowed, is not a solution, only a postponement.

But what are you to do if you don’t want to carry a large roll of cash?  In some areas, that is an invitation to be robbed, or worse. 

The answer is debit cards.  A debit card can be used like a credit card, but the funds are drawn from your personal account—just like a check.  You manage your account just like a checking account.  In fact, my first debit card was called a “check card.”

The important difference is that the money used in a debit card transaction is YOUR money, not money borrowed from someone else.  Dave Ramsey has a radio show about how to manage, reduce and recover from debt.  If you listen to him, you’ll hear him advise an operation he calls a “plastectomy.” That is, cutting up your credit cards.  He approves, however, of using debit cards.

I admit, that Mrs. Crucis and I still have a VISA credit card.  We also have VISA debit cards and I have a VISA debit card on my credit union account. About the only thing I use credit cards for is gas for the cars.  We pay off our credit cards at the end of every month and one single charge for gas is easier to manage that keeping track of every gas receipt.  My wife is much better than I. She uses our debit card much more than I.  Frankly, I don’t remember our debit card PIN and most of my personal purchases are paid using my credit union debit card.

The bottom line to all this is that owning a credit card is not a necessity of life.  Even heavy business travelers often use a corporate card that bills the employer directly. (But Heaven help you if you lose a receipt!)

Like our federal government, we must manage our debt.  We just sent a new set of, hopefully, conservative Representatives to Congress to start managing the government’s debt.  We must do the same for ourselves.

3 thoughts on “A Necessary Evil?

  1. Amen to that! The only debt we have is our home, I can't stand to pay interest on anything. I recently had a conversation with someone and he was complaining about having so much credit card debt the bank won't lend him money for a home. I told him the bank was right…not what he wanted to hear. I asked what he has that he can sell, although I was shocked with his response. He then proceeds to tell me about having debt on his motorcycle and truck as well. I told him to buy Dave Ramsey's material and stick to it, he'd soon be debt free and understand how liberating it is. Like you, we use our debit card and have one credit card. If buying something big we use the CC and earn the cash reward but we only do that because we pay in full every month so the bonus really is a bonus for us since we are using their card for free.

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