Jen calls a credit card a tool. I consider it a weapon. Beyond that, we agree on many things. We understand the need for credit cards to transact business -- especially in the growing realm of e-tail. We both preach that credit cards should be paid in full each month.
Unfortunately, we're preaching to empty pews, Jen. Debt Vader has spoken and too many have been lured into a false sense of financial immortality. It's too dangerous, and, like Vader would say, "you underestimate the power of the Dark Side."
Jen points out some great credit card perks, but what good is it to earn a 1% cash-back bonus when you are paying up 1.5% a month in interest?
It's just not worth it (to anyone but your creditor, that is). Spending, unchecked, is an addiction. The open-ended possibilities of credit cards encourage the addiction. Even if it's not spending, even if it's investing, if you have an outstanding credit card balance the odds are stacked against you. If you are in the stock market, earning historical after-tax returns, you are still paying out twice that amount in interest if you are carrying balances. You might be clever enough to talk down your rate or extend a promotional teaser rate, but it's a matter you will have to address sooner or later. And, with the way interest expense compounds, let's hope it's sooner rather than later.
You can roll your debt into tax-advantaged home equity loans. You can replace your credit cards with secured debit cards. You can't afford not to take action any more than you couldn't afford your initial charges.
Vader? Any last words?
This Week's Duel
Related Links