Wednesday, March 3, 2010

Let's Get Controversial - Credit Cards

I’ve decided to use this week to get through some of the controversial issues I see on other blogs.  I’m simply going to post my opinions and see what you think.

Today’s topic:  Credit Cards *cue scary music*

Let’s just rip off the Band-Aid, I love using credit cards for as much as possible, getting my rewards, and paying them off a few days after I receive my emailed statements.  It makes my super-anal budgeting system so much easier.  I like getting cash back rewards.  Oh, and I hate debit cards, but that’s my own fault.  I’m old school…I actually keep up with every single checking account debit and credit in a check book.  Writing down hundreds of tiny charges does not sound like fun to me.

I got my first card when I was 18.  I’ve never been in credit card debt.  I’ve never received a fee or any interest charges.  If you are addicted to spending or cannot control yourself with a credit card, PLEASE DON’T USE THEM.  Otherwise, why the heck not?!

We have a Discover More card, a Discover Open Road card, and a World Points MasterCard.  We use the Discover More card for everything possible except car expenses, the Discover Open Road card for car stuff like gas, and the MasterCard for anybody that doesn’t accept Discover.  These are the rewards we received in 2009:

Discover More = $263.26 cash back for $21,570 spent (1.22%)
Discover Open Road = $59.18 cash back for $1895 spent (3.12%)
Mastercard = $105.95 cash back for $10,595 spent (1%)
So in all, I earned $428.39 with purchases of $34,060 for a return of 1.26%.

Rewards will not make us rich, but I was going to make all of these purchases anyway.  For example, $8500 of our MasterCard total was for graduate school expenses…I love the fact we got anything back from that!  Yes, there are higher paying rewards cards - check out this Free Money Finance post and comments or the countless other posts online – but I like Discover.  No hard and fast reason, but I’m pretty loyal until a company ticks me off or I can really clean up by moving on.

I also love being able to purchase discount gift cards using Discover cash back.  Do you know how many of our friends and family are Starbucks addicts?  Tons!  Do you know how many of them have birthdays?  All of them!  I love being able to get a $50 Starbucks gift card for $45…I turn around and use it to buy two $25 gift cards and that’s two adults that will be super happy not to receive socks.  No, I’ve never actually gifted socks before, but you get the point.

Ok, what do you think?  Do you use credit cards?  Why or why not?


  1. I absolutely put everything I can on my credit card. We have the UPromise card which sends the cash back to my wife's student loans. We pay this card off in full every month, thus no interest charges.

    The other card I have is a Capital One card from my old business. Hopefully the balance gets taken care of in the next week. After that, I'll probably use it as my personal card, in case I need to surprise my wife with something.

    Like you said though, if you can't control your spending, Don't Use a Credit Card.

  2. I'm with you on this one. We use an Amex card and we got about 1.5% return overall for our rewards. I like Discover as well. I've had a card with them since I was in college and I've never had a problem with them and more than once their service has made me happy.

  3. MikeS, I signed up with Upromise and attached it to my Discover card. So far I haven't helped my little sister much. I wonder if I signed up correctly...

    Good luck with your other card! Like I replied on the net worth string, I hope your bonus is humongous!

  4. Jim, I was thinking about the Amex Blue card today, but I just have a hard time leaving companies that are actually good (Discover). Maybe I'll replace our MasterCard with Amex or just add Amex to our repertoire for the heck of it. They do have a slightly better cash back rewards system...

    Glad to hear that you like Discover's nice to know I'm not being stupidly stubborn.

  5. Crystal, I've noticed with UPromise, that I don't earn much other than the credit card cash back, which is 1%. Other than that, random purchases might qualify, but generally it's just the 1% cash back rewards that get credited. I probably could get a higher level somewhere else, but I figure I won't miss the cash back and it can go directly towards paying the loan off. So far, I think over the past few years, we've earned about $700.

  6. I have used cc's for the rewards in the past, but lately I've got a ton of non-discretionary financial obligations, so I decided to nix the cc's for now. The reason I'm using only my debit card is that my spending on discretionary items was starting to get a little out of control. I think that the mindset of getting 'rewards', despite how miniscule they might be (1%), contributes to the do-good mentality. For example, I feel it's okay to spend $285 on groceries since the rewards will be great. When it all adds up to $50 after months of overcharging, the rationale really seems pretty silly.

    I'm still trying to figure out how some people manage to put ALL of their monthly recurring bills on their cc's for the rewards. All of the companies (of the bigger bills like utilities, mortgage, prop. taxes, etc.) charge a fee to pay w/a cc. If I could do that w/out having these fees assessed, I might consider using the cc again.

  7. Holly, we have all of our bills on auto-pay that don't have a fee, which is absolutely everything except our mortgage and water bill. Those two are auto-debited from our checking account for no fee. I didn't know that most companies had fees...that sucks.

    I agree that people who get overly happy about the rewards shouldn't use credit cards...obviously the rewards aren't that much. I just like them as a side benefit. :-)

  8. I like using the CC's for rewards and for tracking purposes, too. We always pay off our balance every month and I hate carrying cash so I don't see why it's that bad.

  9. Julie, I don't know why so many people think it's awful either...

  10. I guess they are like any other vice. They can be used appropriately or abused. Alcohol and gambling are the 2 things that come to mind. Either one can be enjoyable if done responsibly or can ruin someone. They aren't inherently evil, but can be abused.

  11. Just an update...I finally figured out how to use my rewards card to pay my cell, my cable, and my auto ins. bills w/out incurring a fee. Just log into the site and choose 'cc' as your method of pymt. They usually only charge a fee when you go through a rep, either by phone or by chat.

  12. Holly, great! I just figured out that I could put my homeowner's insurance on my Worldpoints Mastercard (not Discover, sad) without a fee. Yay to $7.65!