Why Credit Cards Are Catching a Bad Rap (And Why They Don’t Deserve It)

It seems like every time you turn around, credit cards are catching a bad rap these days. The interest is too high. The fees are ridiculous. (As a matter of fact, where I come from, a number of small businesses have stopped accepting credit cards altogether because they’ve had enough.) All they do is drive good people deeper and deeper into debt. What people tend to miss in the middle of all of the hype dragging the credit card companies down is that credit cards serve a purpose. An important one. They were never meant to be a tool by which people could bury themselves into debt, but rather, a temporary solution to a temporary need. An Extension of the Barter System Credit did not sprout up in modern times but has been around since this country’s founding. In the early days when our ancestors were building this country, there were stores that sold food and supplies to families on credit. The store proprietor would sell the family the needed commodities and record the cost in a journal. This debt was paid back when the crops came in, or the cattle were sold or whatever seasonal occupation the families were engaged in. This worked well for all concerned. The store could rack up sales; the farmers got what they needed when they needed it and paid the debt when they were able. Eventually, however, as more people moved from farming communities to paid jobs and stores began to change the way they did business, the credit system folded. Payment was expected at the time of service. But there was still too much month at the end of the money from time to time-especially when an unexpected emergency popped up along the way-and so credit cards took the place of the original credit system. The Care and Handling of One’s Credit Card As they appear, a credit card is nothing more than a small rectangle of plastic with a magnetic strip on the back. How you use this little plastic rectangle is entirely up to the owner. Follow are three ultra-simple steps to keep you forever on top of your credit card debt, thus keeping you out of a financial abyss. 1) Limit emergencies to real emergencies-the kind that really won’t wait until payday. Sewage spewing all over your basement from a busted pipe is an excellent reason to use your credit card. Not having enough money to take your mother-in-law out to dinner for her birthday? Not so much. 2) Do not splurge on impulse buying. If the cash isn’t there to buy what you want now, chances are it won’t be there later either. That bearskin rug is a perfect fit in front of your fireplace in the den, but the fiscally responsible thing to do would be to set aside a little money from your paycheck each pay period until you have enough to purchase the wondrous item with cash. 3) There must be ample money in your checking account to pay off your credit card balance each month. We have all experienced the need to call a plumber and know that when we do, we are facing a minimum $250.00 bill. But that cute $150.00 doggie sweater that was on sale you put on your credit card because you were cash poor is not making the cut. To remedy such errors, as soon as you get home, remove $150.00, plus the typical interest fee from your checking account, and put that amount into your regular savings account. Repeat for all non-emergent credit card purchases and you will always have enough to cover the statement without having to pay any fees. Credit cards don’t incur debt. People incur debt. Remember, your credit card is a small, innocent piece of plastic. It won’t get you into financial trouble, you will when you use it unwisely.

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