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Credit card use can inspire many passionate opinions. There are followers of the Dave Ramsey camp, who aspire to a lifestyle free of any credit card use. Other people see credit cards as one of the tools in their financial toolbox - a short-term liquidity instrument or a convenient method of payment.
Ever since I got my first credit card in college, I've been an avid credit card user. In fact, I use my credit card for 95% of non-rent expenses - and if I can pay rent with a credit card, I would! Credit cards offer many advantages over cash or debit cards: fraud protection, virtual account numbers, reward points, etc. I've been getting gift cards with my credit card points for the past few years - they are the only way I can keep up with my expensive Sephora habit. But these credit card advantages can only work for a holder to their fullest if the card holder understands that credit cards are not a source of money.
The biggest component of a philosophy of responsible credit cards is this: Credit cards are a method of payment (much like cash, checks, electronic transfers, PayPal, etc). Credit cards are not a source of funds for payment. For a child, seeing parents whip out a card to pay for clothes, groceries, or other purchases can make them seem like "magic cards." So Mom drilled into me at an young age that a credit card isn't free money. It isn't money you will get tomorrow or next week or next month. It's just a way to pay with the money you already have saved. Now, I pay my credit cards in full every month.
For some people, Dave Ramsey's strict approach to credit card use may be appropriate. If credit card debt has been a persistent problem, then eliminating all credit card use might be the key. Like all things in personal finance, that is an individual decision. I practice a more relaxed approach - as long as I don't carry a balance from month to month, I see credit cards as a useful tool in my financial toolbox. Just like any tool, credit cards can be used for ill or for good. After all, a hammer can be used to break down or build a house. There are also differences in credit card company service, billing practices, interest rates, and reward systems.
The Digerati Life, a blogger in the Silicon Valley, is considering the Chase Freedom card because it has no annual fees and cash back features. LuluGal at How I Save Money deems a rewards credit card as one of the three tools that every personal finance blogger should have. LuluGal says, "A credit card is simply a piece of plastic. It cannot walk or talk or hold a gun to your head so YOU are in control here. How you treat your credit card will determine what happens in your financial future." Madame X of My Open Wallet is a big fan of responsible credit use as well. She has a great list of reasons why credit cards are beneficial.
A good credit card can make life easier for individuals or small businesses who are responsible credit users. There are different cards for different lifestyles - cashback cards, frequent flyer mile cards, rewards cards, hotel point cards. But as always, make sure to check the fine print - don't forget that credit card companies are in the business of making money!
