Credit Cards: The Quick and the Dead

Once upon a time, I felt like I wasn’t “in” because I didn’t own a credit card. I had a job, but yes, no credit card. The feeling sucks, believe me.

At the mall while window shopping, I’d run across a gadget or something I so wanted to have, and after checking the price, I could only heave a sigh as deep as the ocean when I’d find out that the monthly installment was something I could easily afford … if only I had a credit card.

To me then, credit cards represented financial freedom, an extension of my limited financial means.

Image courtesy of adamr / FreeDigitalPhotos.net

Credit cards have earned quite a reputation, ranging from the good, the bad and the ugly. But after all is said and done, and if you do have a credit card, remember, and remember this mantra well – have it tattooed on your arm if necessary: PAY OFF YOUR CREDIT CARD IN FULL AND ON TIME EVERY MONTH. (Sorry I had to put that in all caps, but I’m not shouting at you, okay?)

The wind of change
Times change. People change, and beliefs evolve over time. In my search for the true meaning of financial freedom, I have come to realize that the freedom I’ve been looking for is not at all tied to credit cards.

I still haven’t had a credit card until now, and I intend to keep things that way. Well, at least, until I saw the immediate need for one.

Since the Clint Eastwood The Good, The Bad and The Ugly theme had already been used a good number of times to illustrate the pros and cons of credit cards, allow me my Sharon Stone version of The Quick and the Dead.

The quick
Credit cards provide convenience. You can make purchases without having to bring with you a lot of cash, thereby saving you the trips and hassles of long lines at the ATM when you run out of money.

Also, most credit card companies offer rebates on purchases, air miles and some other forms of rewards like freebies from their network of merchants. Others even allow holders to waive annual fees. Credit cards may also be necessary for online purchases and for traveling abroad.

Now if you’re really a smart one, you can charge your monthly grocery on your card and put the money you should already have budgeted for that purchase in a 30-day time deposit. You wouldn’t have to worry when your bill comes the following month, plus you would be earning an interest on the deposit, a quick way to earn on a purchase you would have to make anyway.

Remember, the key here is to never spend beyond your means. And I repeat, pay off your credit card in full and on time every month.

The dead
Now here are some of the things that might leave you gasping for air in the end.

• Instant gratification. Because of the convenience of having a credit card, you actually might no longer have enough time to think if what you’re swiping the card for is actually a need or a want.
• Paying late. Even a late payment by a few minutes can mean fees and penalties.
• Paying off only the minimum. This is a surefire way to keep you in debt far longer, paying a lot more in interest charges.
• Missing a payment. If paying late and paying only the minimum are bad enough, missing a payment is a whole lot worse in terms of fees and penalties. You might even be awarded … or sentenced with … higher interest rates.
• Buying just for rewards. It’s never worth it to buy something you don’t need just for the rewards.
• Maxing out your credit card limit. If your card is maxed out and you’re earning just enough to live from paycheck to paycheck, this is going to be a real slap to your finances.
• Getting a cash advance. This may sound like a good alternative to an emergency fund, but no, not quite. Consider the fee you would have to pay for the advance, it might actually be more substantial than the actual interest charge you will be paying if you used the card instead.
• Using the card in an emergency. There is no better way to survive a financial emergency than an emergency fund.

Note to the wise
Credit card companies pray everyday that you make a mistake and forget your mantra. Why? Because they are earning less and less from interest and more from fees, so the moment you pay up late, pay only the minimum, miss a payment and the like, they start dancing like there’s no tomorrow.

Credit cards per se are not evil. Just like money, they can’t think for themselves. Whether you end up in debt high above your head or not, it’s up to you to decide.

Yes, it’s all about you
Once you find yourself in a financial mess, never go complaining the credit card companies are charging too much interest. Remember, you affixed your signature on that application form. It’s your responsibility to read and understand everything – yes, everything – on that form, the fine print much more so.

Now if you think you can’t walk that very thin line, meaning, you’re not disciplined enough to hold your horses when confronted with something very tempting, or committed enough to hold on to your mantra like a lifeline, I say pay off your credit card debt as fast as you possibly can. Once you’re free from all credit card bondage, run away from them like you’re running away from the plague.

As Robert Orben, American comedy writer once said, “Life was a lot simpler when what we honored was father and mother rather than all major credit cards.”

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Maricel Rivera

Maricel is a regular mom juggling her time between being a mom and her full-time profession as a researcher for a top-notch financial firm. Add blogging and freelancing to the mix, and it's one crazy ride. But somehow she manages to stay sane. Maricel loves to write about various stuff - from technology to personal finance, from social issues to life in general.

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