Our Love Hate Relationship with Credit Cards

Phroogal Love Hate Relationship with Credit Cards

We have a love hate relationship with credit cards.

As a kid I remember my parents’ American Express card. I’d go with them shopping and watch as the cashier swipe this plastic card into a machine and voila the toys were mine. That image is still with me years and years later.

To a kid that rectangle was a source of happiness allowing me to get things without losing my allowance money. As an adult, we learn how valuable it is to control the impulse of spending on credit.

It’s definitely a love hate relationship when it comes to credit cards.

Some family and friends will tell you to stay away from credit cards. “It’s no good for you. You can do better. Don’t make the same mistakes I’ve made.” But, with those warnings, our interest in them peaks and we are drawn to the allure of those shiny plastic rectangles.

Phroogal Love Hate Relationship with Credit Cards

Our relationships with credit cards are like personal relationships. We may not need the help of another to live life but having someone (or something) during certain moments can be quite useful. Have you tried moving to a new home without any help? Go try renting a car without a credit card.

Did he just compare my love to a piece of plastic?

I did.

Credit cards are useful and can add a layer of protection and comfort in your life but they can become a pain when they go unchecked. They can help you in moments of emergencies but can haunt you for years on end.

And just like a relationship you should evaluate the benefits.

Ask yourself:

  • Is the terms and conditions still beneficial to me?
  • What benefit is it for me to have this card?
  • Are there better alternatives?

Experts and gurus will tell you to stay clear of credit cards. But, every where you turn, you’ll find credit card advertisements luring you back to those childhood moments. We are all susceptible to advertisements but these very same blogs or information portals that tell you to stay away from credit cards are advertising credit cards.

The reason is that credit cards do have benefits that may outweigh the negative stigma that follow them. Your partner may have their negative parts but the good things may outweigh the bad ones.

Credit card benefits range from establishing credit to earning reward points to extended warranties. They’ll give you an extra layer of protection beyond  a debit card and can be a recourse when disputing with a seller. Credit cards do have drawbacks when it comes to overspending. It’s easier to do so when it’s not your money. But, keep in mind that it is your money and you run the risk of impacting your overall financial wellbeing.

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  1. No doubt that credit cards can be convenient as no one wants to carry cash around all the time. Moreover, in many cases (e.g. rental car and hotel reservations) they are essentially a requirement. However, people certainly should not fall in love with them and always be mindful that they are not free money. They can be an effective tool, when like any other tool, they are used properly and managed effectively.

  2. So true Jason, good article. I like the relationship analogy because it’s so true. It’s a double edged sword and like many things in life requires strict discipline. I have certainly made my mistakes in the past, but I think that’s how we learn. Lessons learned the hard way stick better and are not easily forgotten.

    Now, for example I have a miles card that I use to pay my quarterly income taxes (and that’s about it for the most part.) I make the payment with the card, pay that balance with my checking account and rack up thousands in miles points in the process. Then when I want to take a trip I generally pay about 1/5 to 1/4 of the airfare. Certainly a valuable tool, but again, it takes discipline and I have to be very careful of the “everything I spend earns me miles” mindset.

    1. Chris,

      You’re absolutely correct. It takes knowledge and discipline to apply that education to make it work to your benefit. Some call credit card rewards and points as travel hacking. Those folks have learned how to master points making to take amazing trips. People don’t need to go that far but little changes in mindset and understanding that anything on credit is a attached to any future money made.

  3. As we always say, be cautious when you spend money. This is definitely a life lesson. Especially when we use credit cards, there can be many disadvantages and lead to money problems. However, credit cards do help to a certain extent. In particular, I love my 3% back on groceries.

    1. Only use credit cards when you’ve tamed the spending monster. They are helpful if used wisely but for many they turn into ball and chains preventing them from achieving goals.

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