Please Put Down the Pitch Fork | Exploring Credit Card Fanaticism

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You can call them what you wish.  I call them fanatics.

Webster’s defines a fanatic as one who has an “intense uncritical devotion”.

In the credit card discussion, I would say that credit card fanatics share these attributes:

  • Have an opinion that they think must apply to everyone else.
  • Refuse to see any possible positive benefits of the other side.
  • Have extremely negative things to say regarding people who have a different opinion.  They make fun of the people, but don’t deal with the facts.

As such, I would call Dave Ramsey a credit card fanatic.

What causes Credit Card Fanaticism?

Here are some common traits of credit fanatics:

  • People who, in the past, have been burned by having credit cards.  Somehow, it seems as though the logical conclusion is that if I couldn’t responsibly handle one, then no one can responsibly have one.
  • People who regularly listen to the Dave Ramsey Show.  Dave is a financial genius.  He is passionate.  His opinions are persuasive.  He is dynamic.  He is also a credit card fanatic, and his fanaticism often rubs off on fans. 
  • People who think that a debit card provides the exact same benefits as a credit card, without acknowledging any possible drawbacks.  Here’s Why Credit Cards Rule Over the Inferior Debit Card (a clear overstatement of the facts)
  • People who think the world should change and conform to their minority view on credit cards.

Is there an Alternative to Credit Card Fanaticism?

I think there is.  I’d propose something called a healthy balance or using a credit card responsibly.  Let me make this point clearly.  If you are in credit card debt, a credit card does more financial harm than it could ever help.

However, there are folks like those who have left comments at Money Help For Christians who are debt free, financially healthy, use a credit card, and pay it off in full every month.  All the while, responsible credit card users wonder why everyone else is sharpening their pitch forks.  Last week I showed that I actually saved money by using a credit card.

Why are people who have spending boundaries in place and are disciplined with money subjected to the rants of credit card fanatics?  I understand criticizing someone who is knee deep in debt who has a credit card (hey, I do that), but what about someone who has tens of thousands of dollars in the bank?  Doesn’t that person have a ‘right’ to carry plastic without the insults of fanatics?

Drunkenness and Credit Cards: Why I Sympathize with Credit Card Fanatics

I see where all this intensity and passion comes from – witnessing so much damage and destruction from plastic.

In Papua New Guinea, where I live, there is a huge problem with drunkenness.  This Christmas (when drunkenness is at its worse) one person I know was hit by a truck because he was walking drunk, another cheated on his wife while drunk, and another got drunk after 8 years of sobriety. 

And it breaks my heart so see how much damage alcohol has done to individuals and families.  In fact, it tempts me to go on a crusade demanding that stores no longer be permitted to sell alcohol. 

But, there are some who drink socially and drink responsibly (no, I don’t want this to become a debate about Christian drinking).  Should everyone’s choice in the matter be removed simply because of the grievous sins of a few?

Ultimately, the question is …

Can Credit Cards Be Used Responsibly?

My answer is yes. 

What does responsible plastic user look like?

  1. Pay off balances in full each month.
  2. Openly admit credit cards do cost more (but not for me:)), but willing accept those costs as a convenience charge.
  3. Willing to destroy the card the moment they cannot make a payment.
  4. Have some spending checks and balances in place.  For example, we have credit card spending guidelines

I guess at the end of the day, I can say that I love and respect you credit card fanatics.  I can see where you’re coming from, and I sympathize.  However, why can’t you accept me?  Why must I be labeled as an evil force just because I use and say positive things about credit cards?  Can a credit card fanatic please send me an e-hug so I can feel the love?

Is credit card fanaticism valid?  Can anything good come from credit cards?  Am I missing some key causes of credit card fanaticism?  Are you a credit card fanatic?

Comments

  1. says

    Craig – thanks for the perspective on the whole debate.

    Can anything good come from credit cards? Yes – there’s some rewards and perks on the table and people can even get some breathing space on debt if you use a balance transfer from card A to card B.

    The use of a credit card, in and of itself, is not objectively wrong. Your parallel with drinking is ‘on the money’. Its all about the use of the card. I also espouse wise spending practices and management.

  2. says

    Craig, I am not a credit card fanatic even though I abused them greatly when I was in college and shortly after. I’ve been debt free for almost 8 years and I see the dangers of credit cards, but I also see some advantages – my wife and I pay off our cards every month and we use the rewards to get Home Depot gift cards that has helped us get a lot of things for our home.
    .-= Jason @ Redeeming Riches´s last blog ..Tithing – How Much Should a Christian Give? Part 2 =-.

  3. says

    Maybe these credit card fanatics behave the way they do because they’ve been “burned” by using them in the past, getting into deep debt and uncontrollable spending. As such, if they’re diligent enough to get out of debt, a sense of peace and freedom may come over them, and they never want to go back to that old “way of life” again. Maybe they always remember the pain of being in debt.

    But other people are responsible with credit cards. Whether they were trained to be this way, or because it just seems like common sense, they don’t get in debt.

    Yes, I do believe good can come from credit cards, if you use them responsibly. For instance, many people use the cards to earn points, cash, or other rewards. If you’re responsible with your card, perhaps you can redeem these rewards and give them away to people who are more in need of them. Or maybe support some other worthy cause. Wouldn’t that be considered a “good” outcome from using credit cards?

    I love these kinds of “philosophical” debates. Credit card use is kind of like using a hammer. One person can use the hammer to secure the surroundings of a dream house. Another person can use the same exact hammer to demolish that dream house. The hammer is neutral. When placed in the hands of a human, we see the effects of the hammer.

    Thanks for the post Craig!
    .-= Darren´s last blog ..$25 Free To Invest With Lending Club =-.

  4. says

    I love this post! I agree with the others, good can come from credit cards. We book flights and hotels on our cards, and transfer the balance immediately to them from our checking account once it posts. At the end of the day, we’re getting a free flight from the points we earned from going on a vacation. I think thats something good.
    .-= lencib: Falling into Favor´s last blog ..Stop & Listen =-.

  5. says

    @David – I figured you were not a credit card fanatic unless you are an in favor of credit cards fanatic. Your right they can actually be helpful to some people.
    @Bill – your one of those readers who uses them consistently and wisely.
    @Jason – how did you abuse them and not manage to become a fanatic? I think most who have issues in the past have very, very strong opinions against ccs.
    @Darren – agreed. They can be advantageous in some circumstances.
    @Lencib – how you use credit cards sounds almost exactly like how we use them in our family. Except, I would suggest that hotel points (Starwood) are more valuable than air points http://www.helpmetravelcheap.com/which-are-better-hotel-points-or-flight-points/

  6. Rob says

    Good post! Moderation and discipline are key, to be sure. I am not a Dave apologist, but, judging from the majority of his callers, he NEEDS to take a hard line against credit cards. I like to think my wife and I “graduated” from Dave’s program, meaning, our mindset is totally different now, so maybe we don’t need to follow his advice 100% anymore. However, for those who haven’t got a clue and are just starting out, as we once were, his all-or-nothing approach is necessary to drive home the point.

    • says

      @Rob
      Great point. If I was in Ramsey’s position talking to person after person who was calling in with massive amounts of credit card debt, it would certainly taint my perception. In fact, I might just get so sick and tired of it that I would just make a blanket statement – everyone should give up their credit cards. Your right there are a lot of people who need a little credit card fanaticism to jolt them back to reality.
      There is probably an 80-90% chance if I was in Ramsey’s position I’d be a credit card fanatic too. But, since I’m not I’ll be the voice of dissention today.
      Thanks again for the great comment.

  7. Mark says

    I agree completely with you, Craig! I have several cards. I use them for almost everything for the cash rewards. They are paying for Christmas. I’ve always said that I’d cut them up if ever I couldn’t make the payment.

    Now, here’s my plan – and I’m working it! Every day that I make a charge, I transfer money in my checking account to a savings account that I have set up called, “Credit Cards.” Yesterday, for instance, there were charges on three cards. I added them together and transferred the total to my “Credit Cards” savings account. Now each card is tied to that savings account with an automatic payment draft. When the payment comes due, the full balance due is pulled from that savings account. There’s always more than enough money to cover it, because I’m faithful to transfer money the day I make the charge PLUS by the date of the automatic transfer, I’ve got even more money in that account from current charges and transfers.

    With this plan, when I look at my checking account balance, I’m looking at real figures – the amount of money that I actually have, not an inflated amount where I have to take into consideration that I have outstanding balances on credit cards.

    Now, we’re careful with our money and watch it carefully, but I know we’re only human. I mean what I say – If it ever got out of hand, I would cut up the cards and go with a debit card. Great article, Craig!

    • says

      @Mark
      You are really disciplined with your accounting and spending. That makes a huge difference. It seems to me no matter how you paid you would be responsible. Keep up the great work.
      Thanks also for sharing a few tips on how to keep credit card spending in check.

  8. Rob says

    Craig, I must qualify something (I meant to include in my previous post). With all due respect to Dave, I literally can’t listen to him now! I occasionally catch him on Fox Business, but it’s just the same message over and over and over………which I heard 7 years ago! Granted, at the time, I couldn’t get enough of it. Now that we are well on our way, I need sites like Money Help for Christians so I can dig deeper!

    Ever thought about a radio show, Craig? :)

    • says

      @Rob
      I still listen to Dave when I’ve got my Mp3. I’m listending to old archives from the middle of last year. But, I do agree 95% of the call I can predict his answer. Sometimes it does feel like the same old same old.
      Ha – I’ve not thought of a radio show.

  9. Bob says

    Credit cards aren’t evil except when you use them for credit. If you live by one simple rule, you won’t run into trouble: don’t spend more than you have. If you don’t have the money in the bank (or you’re not sure), don’t charge it. It’s really that simple.

    Over the past decade, I’ve accumulated well over $1500 in rewards, while never paying credit card companies anything, since I pay off the balance each month.

    As for the whole argument about spending less with cash, perhaps I’m unusual, but it works differently for me. I spend *less* with credit cards than I would with cash. I put everything on credit cards, since they are convenient and they give me rewards. Why wouldn’t you? It’s a win-win for you!

    Cash is the stuff I have in my wallet that I can use for frivolous purchases. If I have it in my wallet, I know I can spend it… but if I’m doing an abstract transaction using a card, I have to be more careful, so I actually spend less.

    People seem to think of credit cards the wrong way. If you think of them as magic money cards, you run into trouble. But if you think of them as dangerous abstract money objects that should only be used when you’re ABSOLUTELY SURE that you can pay them off many times over, then they’re fantastic!

    • says

      @Bob
      I have heard some folks say they spend less with credit. I know that is not true in my case, but we do all have different spending habits. Sounds like they work out very well for you. And yes, as always the key is to pay them off every month.

  10. says

    I would humbly submit that there are credit card fanatics on both sides of the issue. There are those you refer to – who say that credit cards should never be used. Then there are the fanatics on the other side of the issue who sign up for various credit cards, swearing by their cash back goodness – and saying anyone who doesn’t have or use credit cards is just losing out, isn’t disciplined and isn’t very bright.

    Personally I have one credit card that I use rarely for purchases to get the extra warranty protection and cash rewards. I never use it if I don’t have the cash on hand – it gets paid off as soon as it hits the account. I haven’t paid interest on it in probably 10 years.

    The problem with credit card fanatics on the other side of the issue (those in favor of credit cards) is that they quite often don’t go in with their eyes wide open. They ignore the studies that show on average people spend more when using credit (like the one from Dunn and Bradstreet), or ignore evidence like how Mcdonald’s average order dollar amount increased by 47% when they started accepting credit cards. Or they ignore how often rewards from rewards cards are often never even used. One study showed up to 41 percent of reward cardholders either rarely or never even bother to use their rewards! How can you get ahead if you’re not even redeeming your rewards?

    So in closing – I believe there are fanatics on both sides of the issue, both in favor of credit cards, and against. I think there is a happy medium somewhere.
    .-= Peter´s last blog ..The New $100 Bill Design Adds New Security Features =-.

    • says

      @Peter,
      Great comment. You’re absolutely right that it takes a fanatic to make one. In other words where there is one polar extreme it probably exists to combat another polar extreme.
      From my own research (studying myself not anyone else) I came to the conclusion that I spend more with credit cards. However, I weighted that against the convenience of the credit card and opted to use on (but not for everyday purchases). Personally, I agree that people spend more with credit, but I know there are a lot of people who deny that.
      You’re right on with the points statement. I have more airline points than I know what to do with. This is mostly because my points are with US carriers and I don’t travel a lot in the states. That is a key advantage of cash back programs – people know how to spend cash.
      Thanks again for the comment.

  11. efk22 says

    In response to #18/Peter-

    No one has ever been able to find the alleged Dun & Bradstreet study. In fact, JD Roth from the blog “Get Rich Slowly” has researched this mythical studyfor a book he is writing. He reports that Dun and Bradstreet has no record of this study. I hope that people will stop quoting a study that does not exist.

    See: http://www.getrichslowly.org/blog/2010/04/27/money-myths-and-the-importance-of-thinking-for-yourself/

    My spending is limited by my budget, not my credit limit or the balance in my checking account. I carefully scrutinize every purchase whether I decide to pay with cash, credit, or check. The payment method is irrelevant.

    • says

      @efk22
      I saw the JD Roth article and I was amazed by it. I guess if we say something enough times we think it is a fact. I didn’t think to come back and mention it on this post so I’m glad you took the time to do that.

  12. Gholmes says

    As this debate has fanatics on both sides, I caution those brothers/sisters who do use credit cards not let Pride creep in. In all this debate our attitude should be. “But by the grace of God go I”.

    Here is a post that has links to market research on use of credit cards. If you are one that is on top of it good for Gods grace in your life but dont deny that human nature is drawn to spend more with easy credit.
    http://www.psychologytoday.com/blog/ulterior-motives/201001/spending-and-credit-cards

  13. says

    My first visit to your site and it looks like a good balanced perspective! As a real estate investor there are a couple of unique ways I have used cards.

    1. I have four cards that I’ve had for many years that offered a 3.9% or 4.9% on the balance for life. I paid some balance down on our mortgages by putting it on these cards which are set to autopay each month from our checking account. The card companies made their money on these offers by those who missed payments and lost the low rate at some point. But by maintaining enough margin in finances we’ve been able to beat them at their own game.

    2. I haven’t seen these offers in a while, but there are still offers such as one I just did with Capitol One that was 0% balance transfer till March 2014 with no transfer fee. I transfered $9k from a commercial equity line that was 5.5%. That will save me about $577 in interest. The month before the promo rate expires I have a reminder to shift it back to the equity line before interest kicks in. Again, it is on autopay each month for the minimum balance. It probably took less than an hour of my time to set that up. I really enjoy making $500 hour from home!

    3. I am in full time ministry teaching Biblical principles of time management which means I fly alot. If the church or convention is not buying my ticket it will likely come from my frequent flyer account, which came mostly from buying everything I possibly can on the card, but again never paying interest because that card is set to autopay in full each month from checking.

    The down side to these strategies for real estate investors is that having those balances can pull down your credit scores a few points. But if you work with a local bank and document how you use cards responsibly that can be mitigated.

    These tactics are not for everyone, but if you have the discipline and track record of responsibile use of credit it can allow you to profit by beating the credit card companies at their own game, creating freedom and not bondage.

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