My first credit card was an RBC Visa. I still remember the process of getting it.
A few weeks after turning 19, I took the bus to the bank. After speaking with the teller, she pulled out an application form and led me a small table. I sat down, filled it out, then turned it in to be sent off.
I didn’t read any of the terms and conditions (although I checked the box saying I did).
A couple weeks later, the card arrived in the mail. A little red sticker on the front explained how to activate it; I followed the instructions then stuck it in my wallet.
A decade later, I still have and use that same card. Looking back, I wish someone at the bank had talked with me about how to use it in a responsible way, although I think I have gotten a good handle on it over the years.
I still use credit cards. And even though we have been working hard to pay off our $55K debt, I don’t have any intention of stopping.
Our Credit Cards
Currently, we have three credit cards – a VISA and two MasterCards.
The VISA, the one I got when I was 19, has been our every day card for years. We use it regularly, but it never carries a balance. One MasterCard has been paid in full for months and we rarely use it. The second MasterCard is a new one we are using on a trial basis.
There are five reasons we have for keeping these cards.
We care about having good credit
Dave Ramsey doesn’t care about credit scores. In fact, he goes as far as to say the best thing you can do to improve your credit score is to not have one. Dave’s philosophy focuses heavy on the idea that you should simply pay cash for everything.
I get that, I do. And if you can do that, that’s awesome.
However, I know the chances of us, for example, owning a house without a mortgage are slim to none. And having a low or non-existent credit score will make it more challenging to get a mortgage, as the point of your credit score is to help a bank assess how risky it would be to lend you money.
Of course, Dave does make an interesting note on the specific example of a mortgage re: looking for places that will do manual underwriting. However, I personally feel like unless you’re in a position to always make all big purchases with cash, you should care at least a little bit about your credit score.
It’s easier in some scenarios
Booking flights, hotels, rental vehicles…all good examples of times when having a credit card comes in handy for us.
In addition, I exclusively use credit cards for making online purchases. That said, I treat these scenarios like I would a shopping trip with cash – once the purchase is made, I sign in to online banking and transfer the amount from my chequing account to whatever card I used. Easy peasy.
It is true you can use a debit card for these type of transactions – and it has definitely become easier to use a debit card online than it was in the past – but I like the ease of use that comes with the credit card for these types of purchases.
We spend within our budget
We don’t look at our credit card as “extra” money – it’s just another means to spend cash already in hand. With one (work-related) exception, I can honestly say we have not carried a balance on a credit card since we paid them down at the beginning of the journey. In most scenarios, we pay them off immediately after making the purchase (with money from the weekly budget) or, at most, the following week (and in those scenarios, it is planned that way).
This is a big one – we use credit cards to reap the benefits of reward programs!
With the VISA card, most of the benefits have come in the form of gift cards but when I was paying back my student credit line, I occasionally used the “pay back with points” option.
That said, while the reward program on the VISA has been good to us over the years, the new MasterCard we’re using on a trial basis might become our every day card due to its cash back reward system. We only just started using it so we’re going to give it a bit of time to determine if it’s worth it or not. Expect an update on this in the future.
Credit cards aren’t evil – for us
In other words, this isn’t an area where we experience a great deal of struggle. We don’t carry large balances and we don’t look at a credit card as something we use to extend our pay cheque beyond our means. We are responsible credit card users; taking a hard “credit cards are evil” stance does not reflect that reality. We don’t view credit cards as evil because they don’t hold power over us.
There are certainly individuals who would not be well served using credit cards. If you are using credit cards to spend beyond your means, you’re probably not a person who should have one.
But personal finance is just that: personal. And when it comes to credit cards, the effect they have on a life always comes down to how the individual chooses to incorporate them into their life.
What about you? Are you a credit card user? Or do you take a hard pass on plastic? I’d love to know what you think. Please let me know in the comments below!