I’ve tried to stay up-to-date on the credit-card legislation passed this week by Congress, but it’s all seemed a bit foreign to me. That’s because I haven’t used a credit card in 14 years.
I use a Visa check card. It works everywhere credit cards are accepted, but the money comes straight from my checking account.
I think of credit-card purchases as loans, because it seems to me that’s what they really are. Every time you buy something with a credit card, you’re essentially taking out a new loan. You’re using the credit-card company’s money to buy something and promising to pay the company back, at the risk of suffering interest charges if you don’t pay on time.
Let’s say you need to buy some milk and eggs. You run to the grocery store to buy them, and you use your credit card. You’ve essentially taken out a loan to buy milk and eggs. If you need a loan to do that, it would be my opinion that there’s something fundamentally wrong with your finances, and using a credit card is only going to make things worse. If you have enough money in your pocket or bank account to pay for the milk and eggs but are still using a credit card to buy them, you’re unecessarily risking interest charges if something happens that causes you to fall behind on your credit-card payments.
Perhaps my analysis is overly simplistic. I know there are many people who use their credit responsibly and build up reward points and get other benefits from their cards. And I can’t speak for businesses, because I don’t have any experience in using credit for a business. I can only say that I haven’t had a credit card in 14 years, and I haven’t ever felt that I needed one.