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 โ€” 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 โ€” through annual fees or poor behavior on my part โ€” 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 โ€” 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.

33 Replies to “Why I Applied for a Credit Card (and Why It’s Not the End of the World)”

  1. DirtMcGrit says:

    I strongly believe that consumer credit cards are responsible for the great leaps in worker productivity we’ve seen over the past few decades. Without debt, we’d probably go on three week vacations every year and start eating snails. Unamerican.

    My advice is to get three more credit cards and another job. Also, have you seen the following website?

  2. brad says:

    The arduous task of paying off my credit card debt effectively cured me from any tendency to spend beyond my means. I still have my credit cards and I still use them, but I haven’t carried a balance since my debt was paid off four years ago. Many people assume credit cards are like booze to an alcoholic: once you’ve abused them the only solution is cold turkey forever. But I think that’s true only for a small subset of the population. I think J.D.’s making a smart move here…it’s far more satisfying to exercise control over your spending habits than to feel like they control you.

  3. Tim L says:

    Credit cards don’t get people into debt, people get people into debt! ๐Ÿ˜‰

  4. J.D. says:

    Funny stuff, McGrit. ๐Ÿ™‚

    Does anyone actually buy anything from SkyMall?

  5. [ this is jerry ] says:

    blaming credit cards for debt is like blaming spoons for obesity.

  6. Sam says:

    JD, I’m sure you will be fine (and responsible) with your new credit card. Husband and I just paid off our credit cards but we each kept one to use for travel. Sounds like you’ve got a good plan, saved up for the trip, a daily spending budget, credit card that will save you conversion fees, etc.

    My only complaint, not directed at you, is that its easier to use credit when traveling. Something is wrong with that and it annoys me.

  7. joshuat says:

    “blaming credit cards for debt is like blaming spoons for obesity.”

    Nevermind that Credit and Credit Card Debt is the MOST HEAVILY marketed product in America.

    Credit card companies and banks want people to think they cannot possibly live without credit. Its working. We have higher consumer debt in this country every year. Despite efforts of people like Dave Ramsey, stupid Americans continue to spend more than they make using credit.

    Yes, people are responsible for their behaviour. But guess what? It wouldn’t be so widespread if banks didn’t convince people that they have no choice but use credit cards and borrow money.

  8. bornbad says:

    Credit cards are fine, if you don’t carry a balance. My wife and I each have 1 credit card and we use them when we purchase things online. It’s just the easiest way to buy a lot of things. Yes, we have checking cards, but it’s a lot less easier to fix a problem on a credit card (if there is fraudulent activitiy) than it is to have someone wipe out your checking account! So, to be a little safer we use our credit cards, not our checking cards online.

  9. Aleks says:

    I use my credit card for just about everything. It’s basically a rolling 30-day interest-free loan, plus it gives me 1% cash back. By using Visa instead of cash or debit I probably end up with an extra $200 a year.

  10. says:

    Not only are credit cards promoted very heavily, but financial education is sorely lacking.

    So we can reduce obesity with more education about what we are putting into our bodies and I think it would help if high school home ec courses focused less on baking pies and more on remaining debt free.

  11. stratamarr says:

    Another reason to have a credit card is that just by having one it will improve your credit score. And, if you pay it off in full every month, your credit score will get even better, (obviously)! But even if you have a credit card (and associated account open) and never use it, it works favorably for you.

    Obviously you have learned what it is like not to be caught up with payments.

  12. Andrea >> Become a Consultant says:

    You know, you can prepay your credit card. You can put $1000 on the card before you leave. That way, you’ll cover the first $1000 in charges. If you time it right, you won’t have any payments due before you come home.

  13. dong says:

    I certainly think J.D. will be fine. He’s learned his lesson. While I don’t blame credit cards for the problems consumers have, there is no question they are the primary reason so many people are debt. In the past, people couldn’t borrow like the way they can now. The worst damage they could do was to buy appliances in installments…

  14. Gaming the Credit System says:

    I’m glad that you’ve dropped the anti-credit-card stuff. I hope that you will use this one responsibly and learn the upside to credit cards. You really can make them work for you, instead of you working for them.

  15. Jack says:

    Two more bullet points to add to your pro’s list: you are liable for unauthorized purchases so it’s more secure than a debit card and puts you less at risk; some cards automatically carry extra insurance (e.g. $30,000 accidental death insurance, car rental insurance, or travel insurance).

    Additionally, assuming the person is of sound mind and judgement, I think almost everyone should apply for a credit card (most lenders prefer at least five lines of unsecured credit) and use it responsibly to build up a good long credit history. So when a person decides to finance a car or a house, they would be able to save a ton of money by getting a good interest rate.

  16. KMull says:

    I, for one, fully support this decision. It’s been a long time coming. The “No Credit Cards, Ever” bandwagon is strong… but used wisely, this card can protect you. As you mentioned, debit cards carry risk. I think they are more risky than credit cards.

    Congrats, and good luck!

  17. Tim says:

    again, debit card for cash advances, cc for purchases; otherwise, you will be hit with interest immediately if you take cash advance on cc.

    cc companies cannot force anyone to apply for a cc card. so i’m not sure what the big squabble over cc’s are. it makes no sense to me. I have been seriously into debt before. I learned from that lesson and made a commitment to never do that again. it wasn’t my use of cc or how “easy” it is to spend with cc that got me into debt. it was my behavior that got me into debt. i’m not sure, but last i checked we all are free thinkers. If you succumb to marketing, then you should be judging yourself, not cc companies. like i said, no one ever forced me to apply for a cc.

    JD have fun. use cc responsibly and everything will be fine.

  18. Tony A. says:

    Be wary of the late fees. The only negative mark on my entire credit history is for some late fees I didn’t know about. I had a card I had used to purchase some new clothes for work (one of those store cards) and I expected a rather large bonus in the next month so I wouldn’t gain very much interest. My bonus came in and I paid off the card as planned but unfortunately I was a few days late and they hit me with a Fee. I had thought the card was clean and actually put it away in my bedside drawer and forgot about it. 6 months later my credit history was suffering and I got a call asking if I was ever going to pay my bill. I’m still fighting this but there’s very little I can do about it. I refused to pay the accrued fees and they let me off only paying the original fee but they still left the red ink on my history. So let my mistake be your warning.

  19. MikeVx says:

    It sounds like you have planned this out, and for an overseas trip, this is probably a major aggravation saver. I will be paying off my last CC debt in September (assuming nothing expensive happens that eats past my emergency fund), and then the primary purpose of the card will be to be the “shock absorber” for my emergency fund. If something that requires immediate attention comes up that would be considered an emergency fund point, like when my previous car needed the wheel supports rebuilt, the card can be used for the immediate payment, then be paid off when the bill turns up. I keep my emergency fund in an ING orange account, so instant access is not possible. By the way, using sequence tracking on the CC, I have determined that I am about to pay for the last repair on the car that was scrapped back in January due to an accident. (Another reason to get out of the regular credit habit.)

  20. Bloggrrl says:

    I do think it hinges on impulse control, which for me can be a problem. I have what I call the $8000 teddy bear that I got for signing up for an offer while I was waiting for someone to meet me for lunch at a conference. If you can pay off the balance every month, more power to you. I don’t think I could do it, though.

  21. Kirrily says:


    Another thing you didn’t touch on, but which I think is pretty vital to this: this time, you’re accountable. By posting about it here on GRS, you’re inviting us all to follow along with what happens, and you’re likely to feel a certain responsibility/guilt/whatever with regard to us and our perceptions of you. A lot of people reckon that announcing an intention or resolution publicly helps you stick to it. I’m betting it’ll be the case here, too.


  22. Lazy Man and Money says:

    The difference is that you’ve learned a lot from that time. Most of the people that run into credit card problems haven’t learned how to use them responsibly as a tool to actually save money. I’m glad that you are making this move. It might not save you a ton of money, but I’m pretty confident it won’t cost you any.

  23. Packey says:


    Just to be clear, the card you selected is one of the few that waive the interbank conversion fee. Outside of Capital One, all of the Credit Cards and Debit card appear to carry the same fees. I wanted to point that out because this point is not a credit card vs. debit card topic but rather a Capital One vs. all the others issue.

    Here is a good article that covers this topic in detail.

  24. Bill says:

    Funny folks – McGrit, [this is jerry] – funny analogy.

    Yes now that JD has told us I think we should force him to post his statement here every month. ๐Ÿ™‚

  25. Adventures In Money Making says:

    I use credit cards almost 99% of the time.

    however i always pay them off and I take advantage of either points or cash back.

  26. jet says:

    My favorite part….
    “Consumer debt is a foolโ€™s game.”

    “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.”

    Having quoted that, why not get a prepaid credit card? Personally I have no CC’s. Had one for a year. Never had any problems , it was just a hassle. Havent had it for 5-6 years. No others debts what so ever. I earn 6 figures , have a family. Have traveled the world. No problems. To each his own.

  27. DirtMcgirt says:

    I don’t know when your trip is, but you might look into getting a phone card before you go. Phone cards for specific applications (i.e. US to Poland) can be as low as 2ร‚ยข/min.

    Never stick your credit card in pay phone in a foreign country. Rates are often not clear and can be as high as 1$/min.

    For online purchases with the credit card I’d suggest using something like MBNA shopsafe (temporary numbers that expire and have user defined limits).

  28. I'm Always Right says:

    # [ this is jerry ] Says:
    blaming credit cards for debt is like blaming spoons for obesity.

    I get your meaning but the difference is that a spoon doesn’t actively work against you or look to take advantage of you.

    The reason why people say that credit cards are fine as long as you pay the balance off each month is that is the only way to keep the power in your court, instead of theirs. As soon as you carry debt and they know they are in control, you are subject to a royal screwing.

    Spoons are neutral. Credit card companies are not. We always have control over spoons (unless they are greasy) but we don’t always have control of the credit card account. [ETC]

  29. jet says:

    I am sure this was discussed in great lengths before. However I must ask…
    Is the author aware that moving debt does not solve a spending problem. By moving debt to a Heloc you treat the symptom , not the problem. You also lose the pain of paying it off. Its from the pain of paying every bill individually you learn not to get back in the mess.
    As I said before in my other post, I have no debt and honestly never did , except when I bought into the myth I needed credit. So I borrowed money to build it. However payed it off to early to get a score , before doing away with the idea. So this is all opinion not experience. Take with a grain of salt.

  30. Russell Heimlich says:

    Good job JD. Not having enough cash on hand can be a big hassle not to mention the ATM fees that can build up at any non-local ATM. A credit card is accepted almost anywhere and can be a real time saver. Heck you can even automatically pay for monthly utilities like cable or cell phone service eliminating any chance of a late fee. Then at the end of the month you only have to remember to pay the credit card bill and not the other ones.

  31. Sam says:

    Reading this month’s Money magazine I came across an article on how to save money when converting to the Euro. #1 on the list was to use a credit card and Money suggested Capital One and Discover b/c of the low or lack of fees.

  32. JB says:

    JD, great site I do love it so much! If I’m honest I still don’t get the benefits of a credit card… You and other bloggers, use terms that are vague on how a credit card can save you money, like “this card will save me money.” (4th bullet of 4th paragraph), “those who are unprepared to use them” (few more paragraphs down), “then consider a credit card as an option” (few more paragraphs down). In all due respect, these suggeted benefits seem very vague, what are the hard solid money-saving reasons for me to have one? I know that I don’t need one to ensure I have a good rate on my mortgage. I was a Loan officer for 2 years, and I gave great rates to people who definetly didn’t deserve them, people with marginal credit, people with little credit. I was in this business up until 7 months ago. When ever a person came to us with squeaky clean credit, we had no problem getting a good rate in a solid loan. Bottom line, what are hard practical reasons I should have one of these?

  33. MtoLondon says:


    Well, if you travel a lot (I logged about 70,000 miles in 12 months) they are a blessing. I left my debit card at home in a safe and only brought with me a charge card and some travelers checks for cash. The USD/GBP exchange rate is brutal and has been brutal for awhile. By using my CC for just about all of my expenses not only did I get lots of cash back, but I got a better exchange rate and no commission transactions. That is saving a lot of money when its 2USD/1GBP and exchange fees are at least 3%. At the end of the month, I had an itemized account of what I had spent, and I paid it in full because I had to pay it in full. An American Express will do that to you ๐Ÿ˜‰ At one point, my backpack with my wallet, laptop, PASSPORT, etc. was stolen and after a toll-free international call (on them), everything was set. My appointment at the embassy was taken care of and they were forwarding paperwork to prove my identity, a new laptop with an American keyboard was ordered, and a replacement wallet was being delivered over night. For someone who travels a lot, that $99 annual fee more than pays for itself.

    P.S. I’m a graduate student, so I have a ‘fixed’ income and have footed the bill for my education myself.

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