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Question: Aren't there uses for credit cards that are considered positive uses? Like rebates and airline miles? No, this is a common myth. A truth would be that a responsible credit card use simply does not exist. Currently Americans are in serious Credit card debt, it has become a major problem in the United States.

There is NO positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! But most families don't pay on time. The average family today carries $8,000 in credit card debt according to the American Bankers' Association.

Now let's talk about the rebates. If you were using a credit card at 5%, you would have had to have spent $80,000 to get $4,000 rebates on new cars that lost $6,000 of value when you drove them off the lot. That is not a good deal!

Cash vs. Credit Cards

When you pay cash, you can "feel" the money leaving you. This is not true with credit cards. Flipping a credit card up on a counter registers nothing emotionally. If you use credit cards instead of cash you will spend 12-18% more. This is money you could have saved.

If you "have to" use plastic, I suggest a debit card. I use them for travel and the occasional convenience of ordering something over the Internet or phone. Other than that, I use cash.

Personal finance is 80% behavior. You need to cut out habits that make you spend more. You do not build wealth with credit cards. Use common sense. When you play with a multi-billion dollar industry and you think you're going to win at their game, you are naive. You cannot beat the credit card companies.

Q: My card issuer is about to raise my interest rate. Can I ditch the card and pay off the balance over time at the current rate?
A: Usually, yes. Credit card issuers in several states (including Delaware, where many issuers are based) are required to let you pay off your balance at the old rate as long as you close the account to new charges. Even in states where there is no such law, many card issuers offer the same arrangement. But if you use the card after the new rate takes effect, you will have automatically accepted the new terms.