Wednesday, April 29

Sorry, but credit cards don't suck

Free From Broke has a tremendous post entitled, "Credit Cards Suck!" As rants go, it's a purty one. Lots of reasons to hate those mean old credit cronies. All sorts of duplicitous maneuvering.

But, and this may make me unpopular with the PF crowd, I have to disagree. Credit cards don't suck. Not by a long shot.

Yes, I understand that they can be deceptive. That's why it is up to us to read all the pamphlets and notices they send us. (Do I practice what I preach? Not always, but I accept that any fallout from that is my fault.)

Of course, there are genuine cases where credit cards treat customers poorly. I understand some have randomly assigned monthly fees just for having an account. And others are randomly cutting lines of credit. Awful practices, but you can still look around for other cards. We're back up to the usual number of card solicitations in the mail again. Clearly, some companies are looking for new customers. And even if you don't have that option, the card companies don't have to know that. Find out about a deal offered to someone else and quote it to the company.

So, okay, there are times when anti-card rants are justified; but, by and large, the cases that FFB points out are due to consumers' willful ignorance. He mentions the old appliance store trick: the 0% for 12 months. In this case, if the entire amount isn't paid off within the 12 months, retroactive interest is charged. I've known about this little ploy for years. So whenever I sign up for 0% anything, I find out if those terms will be used.

Even if you didn't know to ask, that fact was certainly in the terms and conditions. You just didn't read it. In fact, most of us don't read the pamphlet the card companies send out. The print is tiny, the wording is difficult and we're just not interested. So we agree to terms we don't know. Then, when those terms are enforced, we are outraged and feel that we've been wronged. More importantly, we feel that the card companies are the ones who have robbed us -- not our own disinterest in legalese.

Frankly, I think a lot of the anger directed at card companies is a disguised form of entitlement -- the same entitlement that led so many people into debt in the first place. It's almost as though people seem offended by card companies getting money from them. I sometimes wonder what they expeected to happen. Perhaps they thought the company would make them an exception?

Here are the facts: You signed up to get a card; the card charges interest; you will be charged interest. Why is that such a crime? Why do people get to get so angry, if they're not somehow expecting special treatment?

I'm willing to bet these complainers weren't always so anti-plastic. When they got their first cards, they probably loved them. They loved the credit card companies. It was a pure romance, unfettered by nasty realities like ability to pay and interest rates.

But eventually, the tide turned. The relationship wasn't as beneficial to them anymore, and they're angry. While they dig themselves out of debt, they begin to blame the card companies -- to hate them, even. How dare the card companies offer credit with a low introductory rate, specifically set for a finite time?! How dare the companies extend credit further as the people got themselves deeper in debt?! Clearly, the companies should have been holding their hands and acting only in the consumers' best interest, profits be damned!

Don't get me wrong: I know some companies violated consumer rights. They should be punished. But a lot of so-called "abuses" I hear about are nothing more than standard business practices.

For example, FFB complains about credit card companies setting up on campus and offering free t-shirts or other items. As though students are incapable of resisting the lure of a cheaply made, logoed bauble. Yet, plenty students do. Most of my friends avoided that trap. It wasn't exactly an irresistible force, against which we had no will. Some people simply chose not to exercise it.

That said, I understand why some people would sign up for such a meager reward. It's because credit cards are sexy. They're a status symbol, first of all -- especially when you're young and cardless. Beyond that, they're sexy because they give us power. And power, as Kissinger once observed, is the ultimate aphrodisiac. With the cards, we have the power to spend money we don't have. (Maybe we'll have it later, maybe not.) They give us the power to push responsibility and logic into the future, the power to get cool stuff right now.

This credit lust blinds many people to the basic facts. I cannot count the number of times I've read a blogger or blog-reader lament that credit cards are just out to make money off you. You can practically see the venom dripping from this statement.

But why is that such a surprise? Why is that such a bad thing? Credit card companies are businesses; businesses exist to make money. It thus stands to reason that credit cards exist as a way to profit off their customers. If you're a customer, that means you.

My parents were always very clear about that growing up. They had credit cards. They used them. Heck, maybe they even carried balances. I don't know. But I got the message loud and clear: Credit cards are tools, not manna from heaven. So maybe I don't understand because I entered this Faustian bargain with my eyes wide open. Honestly, I have trouble understanding, especially in this day and age, anyone who didn't.

Credit card companies entice you. Sure. No argument here. But, then, so do retail stores. They dangle pretty things on the TV screen or in windows at the mall. They advertise sales to get you in the door. Are they evil too? Are they out to screw you over? Or is it only when they offer you a store credit card that they sink into the pits of hell?

I guess, in the end, I'm not angry because I always knew it was a game. Frankly, I think the companies have always been pretty clear about that. Sometimes we win, when we can afford to pay off the balance in full and avoid interest charges. Other times, the companies win and we owe them some hefty interest charges. Just because the terms aren't in your favor, doesn't mean that the game is fixed. Not when you belly up to the table voluntarily.

So, FFB: Sorry, but I refuse to see credit cards as evil entities trying to suck the marrow from the corpse of your credit score.

I'm not saying I haven't paid plenty of interest. Sometimes it was as a result of not doing enough homework before deciding on something. Other times, it was a purchase I couldn't afford, but needed, such as my medication. Perhaps my options were limited, but there were still options. I could have gone without my medication. That wasn't a good option, but it was still, technically, an option. Instead, I chose to charge it. I accepted that interest would accumulate. So I really can't blame the companies.

Actually, I am grateful for credit cards. They have saved my hide many times.

  • I was able to get all the medication I needed. Without Effexor, I would be in severe pain, as the body has a very severe withdrawal reaction. I would probably also have tried to kill myself. I'd have preferred to be able to afford the medications without credit cards, but that wasn't always an option.

  • Without credit cards, who knows when we could have afforded Tim's dentures? The surgery alone cost $6,000. It took us ages to pay that off. And he had already been on a no-solids diet for months by the time he got his new smile. He had been exhausted all the time from a lack of calories and nutrients. He was also in pain from several exposed roots. I didn't want him to wait a moment longer than he absolutely had to.

  • By signing up for US Airlines credit cards, my mom and I were able to get enough points for two free tickets anywhere in the U.S. So Tim and I were able to go on a honeymoon, despite limited funds.

I'm sure there are plenty of other items I'm forgetting.

The point is that credit cards are a tool. If you lose sight of that, who is really to blame? You're the one who approached the table offering a free shirt. Or bought the appliance on a store card, without thoroughly knowing the terms. So if everything boils down to a choice you made, why is it everyone's fault but yours?



Blogger FB @ said...

That's true that we just don't read the info.. but in short, credit cards don't suck if we just clear the balance each month :)

I've never had a problem with CCs. In fact, they've PAID me $25 to keep a card. LOL!!!!

April 30, 2009 at 5:11 AM

Blogger Free From Broke said...

Great rebuttal! Honestly, I agree with a lot of your points. I think you even beat me to my own article stating why it's the user who's bad not the credit card.

We've turned into a society that expects other's to get us out of our mistakes. We're no longer responsible. Look at the economy. You run a bad business model you go out of business unless the company is so big that you have political attention. Then you get a hand out!

We have to return to financial values our grand parent's generations believed in. Save and use cash. Credit cards aren't all evil. We make most of the problems for ourselves.

April 30, 2009 at 6:03 AM

Blogger DogAteMyFinances said...

The most important benefit to me is the dispute. Amex saved my tail on a BS hotel charge in a foreign country. Disputing charges doesn't seem like a big deal until you need it.

April 30, 2009 at 7:37 AM

Blogger Ginger said...

I agree, credit cards are tools that are meant to be used wisely.

If you can respect them and use them properly then they can be great.

I love my credit cards because they offer me points and free stuff, as well as some bang-up consumer protection against fraud.

But of course, I don't keep a balance ;)

April 30, 2009 at 9:20 AM

Blogger Mrs. Modern Tightwad said...

I agree with you Abby. In my mind credit cards are a tool, and frankly, if I jam a pick axe into my foot, it's really my fault for not paying attention. Hopefully some of the truly unfair business practices will be fixed in the upcoming credit card reforms, but I'm just planning on better use of my tools.

April 30, 2009 at 12:19 PM

Blogger Alane said...

Amen. I also feel the same way about mortgage companies. You signed the contract you owe the money. Nobody twisted your arm to buy a house bigger then you needed or in a neighborhood you knew you really couldn't afford.

April 30, 2009 at 12:34 PM

Blogger Ms. MoneyChat said...

personal responsibility, what a lost gem. although i'm not a big fan of credit cards, i am a big advocate for personal responsibility. I don't have any scientific proof but my guess is that most of the people who use credit cards, do so foolishly. i don't blame the cards, i definitely blame the people - i used to be one of them.

April 30, 2009 at 5:00 PM

Blogger Cindy B. of Montana said...

I couldn't agree with you more and thanks for saying it. I just don't get the people in our country who think they have no responsibility for their mortgages or bills and think they're being taken advantage of because they don't read the fine print or ask question (we have family members in that boat). I admire you and your husband for all the hard work you two do to take care of yourselves and each other, I know it can't be easy for you!

April 30, 2009 at 7:05 PM

Blogger T.W. said...

You're right, we have to take responsibility for our own actions. Sure, I've fallen into the credit card trap, and I'm still paying for it, but I know it was my fault. I even plan on keeping a credit card after I pay them off, but hopefully I will have learned my lesson.

May 1, 2009 at 6:56 AM

Blogger carissaad said...

You're absolutely right. Although, I'm not happy that BoA more than doubled my interest rate for no reason and refused to decrease it when I called. I transferred the balance, so they lost in the end.

May 1, 2009 at 11:39 AM

Blogger SavingDiva said...

I agree with you! I love my credit cards. I pay them off every month and they have helped me pay for something quickly (before the money from my savings account transferred to my checking account cleared).

May 4, 2009 at 6:39 AM


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