Why I Applied for a Credit Card (and Why It’s Not the End of the World)

Credit cards ruined my life. Between 1989 and 1998, I accumulated nearly $25,000 in credit card debt. During that time, I added about $2,500 of new debt every year (over $200 each month). I was a compulsive spender. Eventually, the debt load became so great that I was forced to face the problem. I cancelled my credit cards, rolled the debt into a home equity loan, and haven’t carried a personal credit card for the past nine years.

Credit cards have made my wife’s life easier. Kris has been an active credit card user since 1989. She, too, has charged about $200 each month. However, while I carried a balance, she did not. In the past eighteen years, she’s paid interest on a credit card only once. She does not charge anything for which she cannot pay cash.

On Saturday I mentioned that I have applied for my first credit card in nearly a decade. This worries some of you — you are concerned that I’m setting myself up for failure. I understand, but let me assure you that I don’t believe this is the case. This was not a choice I made lightly.

Here are a few of the reasons that I decided to get a credit card:

  • I am making excellent progress paying off my home equity loan, which represents my former credit card debt. I’m still on course to have all my non-mortgage debt paid off by the end of next March. It is my intention to never carry consumer debt again. Consumer debt is a fool’s game.
  • Though I haven’t carried a personal credit card in nearly a decade, I have carried business cards. For several years, I carried a balance on my computer consulting credit card, and that worried me. It demonstrated that I still had not learned to use credit wisely. But over the past two years, I’ve used them responsibly.
  • If I were to travel using only my debit card, I would be dinged with various “currency conversion” and “foreign transaction” fees whenever I made a purchase. The card I chose has no fees for use overseas, and carries no annual fee. It also grants 1.25% cash back on all purchases. Used wisely, this card will save me money.
  • I’ve worked hard during the past six months to save money for this trip. I’ve accumulated $2,000, which gives me $100 per day for sightseeing and food. Even with a credit card, I will not spend more than this amount. When I receive my credit card bill, I will pay it in full. I already have the cash to do so.

I appreciate your concerns, and I’m not trying to minimize them, but I want to make it clear that this was a careful, reasoned decision, and not a whim. I debated the idea for two months. If it seems for even a second that this is going to cost me money in any way — through annual fees or poor behavior on my part — I will destroy the card and cancel the account.

When I started this site, I was just as opposed to credit cards as many recent commenters. I still believe they’re a trap for those who are unprepared to use them. But it’s actually you, the readers, that have convinced me credit cards are not inherently evil. Over the past year, I’ve read many stories from people who use credit responsibly, for whom a credit card is a convenience and not a burden.

I’m still not a fan of credit cards, but I’ve come to recognize their potential utility. The important thing is to know yourself — to do what works for you. If you believe that owning a credit card might tempt you to spend more than you earn, then do not use one. But if you are in control of your finances, and if you can trust yourself to do the right thing, then consider a credit card as an option.

The old me could no be trusted with credit. The new me can.

They’ll give a credit card to anyone these days

Because of Opt-Out Prescreen, I no longer get credit card offers at home. From time-to-time, though, I get them at work. A few weeks ago, I received an offer that puzzles me:

Seems pretty normal, huh? Well, let’s look more closely. Here’s the address:

And the fake card:

(Why do they include fake cards, anyhow? Do they really induce more people to apply?)

I have no idea how anyone found a database in which my name was listed as “Roth Dohn” instead of “John Roth”. And “Custom Boc Service”? What exactly does that company do?

All I can come up with is that maybe person A, who had a heavy accent of some sort, read information from an existing database to person B over the phone. But then why didn’t they mess up the street address? The street address is difficult, even when I’m giving it, and I’ve been repeating it for nearly forty years.

If I were more mischievous, I’d fill out the application and send it in. I have no doubt that Roth Dohn would get a credit card.

In related news: Today I submitted an application for my first personal credit in many years. (Under my real name — not as Roth Dohn.) It was a tough decision. My inability to handle credit responsibly got me into debt problems to begin with. But I’m a different person now. I’ll be fine.

After many people recommended a Capital One card for overseas travel — there are no fees on purchases made outside the U.S. — and after realizing this could save me money and provide convenience, I decided to apply on-line. Unfortunately, the web-based application hung. It wouldn’t accept my birthdate.

I called Capital One instead. “I’d like to apply for a Capital One No Hassle Cash Rewards card,” I told the man who handled my call.

He was very eager to help me. “No problem, sir. We can help you out. We’ve got a wide variety of cards with great mileage programs,” he said.

“I don’t want a card with a mileage program,” I said. “I want the Capital One No Hassle Cash Rewards card. I already researched it online.”

“I understand, sir,” the man said. “But you can use miles just like cash. For example, with this card…” He rambled on and on. Eventually I convinced him to let me apply for the card I wanted, though he kept trying to talk me out of it. (Do these folks get commissions for selling certain cards?) Also, the APR he quoted me over the phone was 15.88% instead of 13.88%, but I didn’t fuss about it. I will not carry a balance on this card. This card is simply a convenience. The APR is irrelevant.

I spent twenty minutes on the phone completing the application, increasingly frustrated with the customer service rep trying to steer me toward choices I did not want. And then, when the application was finished, he announced, “Thank you, Mr. Roth. If your application is approved, you will receive your card in two or three weeks.”

Oops. I may have cut the timing too close. I’ve got my fingers crossed — we leave for Europe three weeks from today!