Top Excuses for Using Credit Cards Die a Painful Death

I’ve heard every excuse in the book for having and using a credit card. It’s time to put the top 20 on the firing line:

1. What if there’s an emergency?!
   Plastic is never a viable alternative to a clean, pure emergency fund standing guard in a bank account somewhere. Plastic is false security. So let’s say you have a $1,000 emergency and you put it on Visa. Now you’re $1,000 more in debt. You’re replaced one emergency with another!
2. It’s just one credit card. Come on, it won’t hurt nobody!
   It certainly won’t hurt the credit card companies, but by spending borrowed money you’re putting yourself and your family at risk of fraud and bankruptcy.
3. I swear I use it just to pay my utilities and then I promptly pay it off every month.
   About sixty percent of cardholders carry credit card debt from month to month, according to this report, and the same report tells us that the average credit card debt for households that carry a balance is more than $10,000. 60% and $10,000 are some pretty bold statistics. But let’s say you’re in that 40% minority. If that’s you, then you can clearly afford to use your own money to pay for utilities. Just use your check card!
4. I get 3.65458476448% cash back; that’s like free money!
   I hear people brag all the time that they’re beating the credit card companies because they use their cash back card to make purchases and then promptly pay off the balance. I explained in an earlier post that you’re not beating the credit card companies because they know you spend 12% or more extra when using plastic verses cash because of the phenomenon known as disassociation.
5. I get airline miles or other obscure rewards every time I use my card!
   Depending on the airline and credit card used, anywhere from 50% to 75% of airline miles go unclaimed. Combine that with booking and other fees and being restricted to certain airlines and booking methods, is it even worth the trouble? Let me answer that for you: No, it’s not. The same goes for every other reward. Keep in mind these companies—credit card and otherwise—are in business to make money, not to do you a big favor because they love you. Your perceived benefit outweighs your actual loss.
6. If I don’t habitually honor the FICO gods by systematically using my credit card, I’ll ruin my credit rating!
   All FICO does is measure your relationship with money you use that isn’t yours. It’s all right here on the FICO website. What happens if you don’t use borrowed money? Your FICO score takes a serious hit, and eventually, it goes away altogether. But what does it matter if you don’t borrow money? Free yourself from the binds of FICO, my people.
7. If my credit rating is bad I can’t get a mortgage!
   This simply isn’t true. Certain lenders determine your credit worthiness through a process called manual underwriting. In this process, a real human researches your rental payment history, income, down payment available, and assets, and bases their decision on their findings. If FICO took these things into consideration, they’d be getting closer to an actual credit worthiness score, but they don’t and likely never will because that would decrease the perceived need to use plastic. So where can you find a lender that uses manual underwriting? Don’t look to national chains. Instead, look at your local, community-based lenders.
8. Don’t you know that if your credit rating is bad your insurance rates go up?!
   Yes, this is a possibility. In fact, it just happened to us a few months ago. As our credit accounts are shriveling up and dying off our FICO report, our score is steadily decreasing. We just received a letter from our agent stating that our rates are going up because of it. Our rates went up very slightly. I’m talking pennies. Nonetheless, I took it as an opportunity to shop around for better rates and I found we’re still doing quite well with our current carrier. However, it pales in comparison to the risk of using borrowed money, so I’m not losing any sleep over it.
9. This card has saved my hide on more than one occasion. I can’t just cut it up.
   That’s great that you’ve found a true friend in your credit card. Someone who is there for you when you’re down. Someone who charges high rates and fees. Look, it’s a piece of plastic. Wipe away your tears and get yourself a solid, good, cash-based emergency fund! See Excuse #1.
10. This was the first credit card I’ve ever gotten.
    Yet again with the personification of plastic. It’s the first card that started this terrible habit of spending money you don’t have. What better reason to get rid of it.
11. Right now it’s just a gold card, but if I hold onto it a bit longer they’ll give me the platinum card!
    Ever notice how they don’t have copper cards or aluminum cards to indicate a newbie borrower? Everyone has a gold or platinum card. Why is that? It’s pure marketing. Make the product seem like something people attain, people live up to, and they’ll beat a path to your door. Sorry, but you’ve been duped.
12. All of my automatic payments are hooked up to this card!
    So switch them to your check card! You had the right idea having your recurring payments, like utilities, drafted automatically, but you used the wrong vehicle. It only takes a phone call or a website visit to change each one. Take an hour and get it done.
13. I still owe on this card, I can’t cancel it!
    You can close a card while you still have a balance, and if you’re addicted to spending on plastic I suggest you do this right away. You still owe the balance, but you can’t make further purchases.
14. Use cash?! What if I misplace it or someone steals it? With my plastic, I’m protected!
    You’re right. No one ever has an issue of stolen card numbers; that never happens. Oh, there was that one time eleven people stole 40 million card numbers. My bad. Yeah, it sucks to lose money or have it stolen, but if someone steals $10 out of your office, that’s all they’re going to get. If they steal your plastic they can get thousands. And no one will ever steal your identity from your cash.
15. I have to have a credit card for online transactions!
    You can use your check card, get over it.
16. The interest rate on this card is awesome!
    The only time you should brag about an interest rate is when you’re talking about how much money you’re gaining, not losing. It’s not impressive to pay someone to use their money, in fact, it’s embarrassing. This concept is lost on our society but it didn’t used to be. Besides, you’re at the whim of the credit card company. They can raise your rates at any time for any reason. Even if you’re never late on a payment, if they see something they deem as potentially negative, they can and will raise your rates. Another stab from your beloved FICO.
17. You can’t rent a car/hotel/boat/Sherpa without a credit card.
    C-h-e-c-k  c-a-r-d. See that little Visa emblem on it? That means it acts just like a credit card, only without all the borrowed money.
18. My kid has a credit card so he/she can establish good credit.
    Teach ‘em while they’re young how to worship at the altar of FICO. Good plan. It’s worked for you, after all.
19. I’m a business owner. All businesses have to use credit cards for business purchases.
    So many business owners believe this. Some people even believe that using credit personally is bad, but it’s ok as a business. Why is that? Shouldn’t your business operate with the same values and principles as you? Isn’t it also possible for a business to get in over its head with debt? And if it does, who is left holding the bag? You, Mr. or Ms. Business Owner.
20. I just paid my annual fee, I can’t cancel it now or else I’ll lose money.
    Step 1: Call them up to request they reverse the fee. Step 2: Cancel the card.
    They might not reverse the charge, and if they don’t then you have an excellent reason to tell them why you want to cancel it. It’s a good time to start losing money on that card for good.

There you have my top 20. What other excuses can we debunk? What did I miss?

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