Having spoken to thousands of debt-ridden Americans, I’m convinced that credit cards are one of the most misused financial products in the country. I see more pain, sin, marital problems and mental illness due to credit card problems than any other single source.

But I disagree with people who say that no one should own a credit card. To blame credit cards for our spending problems is a little bit like going into the Burger King, coming out looking like a Whooper, and then blaming them for the problem!  The usage of a credit card has more to do with self discipline and personal control than anything else. Frankly, I believe that credit cards can actually be helpful in a number of ways:

  • If your credit card is stolen and used fraudulently, you’ll likely have fewer problems retrieving the loss than you would if your cash was stolen. In many cases, your liability is limited to $50 per card.
  • Some credit cards extend the product warranties.
  • Credit cards offer a good way to manage your money.
  • Many credit cards offer neat benefits like cash back, airline miles and other premium services. Of course, these “benefit” cards also tend to have higher interest rates and slightly higher annual charges. But, for people who follow what I teach in our No Debt No Sweat! book and seminars, the interest rate aren’t a problem—because we don’t carry a balance! And, as far as the annual fees, it’s simply a matter of running the numbers and making certain that the rewards outweigh the costs.
  • If you have a dispute with a merchant, your credit card company may be able to assist to resolve your issue with that merchant.

But there should be a skull and crossbones warning here, too. While they’re promoted as plastic prosperity, credit cards are plastic explosives for millions of Americans. I would agree that some of us shouldn’t even touch them. I believe there are four things that anyone using a credit card should do:

1. Never buy anything with a credit card that you wouldn’t buy with cash. If you don’t have money in the bank to pay for it, don’t buy it. Studies show that people often spend 12–40 percent more when they’re using plastic!

2. Have a “Love Number” with your spouse. Agree with your spouse beforehand on a maximum amount you can spend with the credit card—and don’t exceed it without first talking to each other and agreeing that it makes sense.

3. Pay every single penny every single month. If you notice a couple of months passing with an unpaid balance, it’s time to pay it off or get rid of the card!  Never, never, never carry a balance! It’s a witch’s brew for trouble. 

Nothing that I say here is meant to sound harsh. But having met with, and wept with, people all over the country who have been caught up in the credit card trap, I am convinced that only disciplined individuals should use credit cards. Many people are better using checks, cash and debit cards.  

Steve Diggs has presented the No Debt No Sweat! Money Management and ReTooled & ReFueled Essential Life-Skills Seminars over 500 times at churches, colleges, conferences and other venues nationwide. Visit Steve at www.NDNS.org, www.RetooledAndRefueled.com or www.SteveDiggs.com or call 615-834-3063.  Today, as the author of seven books Steve is a TV commentator and fulltime speaker.  For 25 years he was President of the Franklin Group, Inc. Steve and Bonnie have four grown children whom they have home schooled.  The family lives in Brentwood, Tennessee.