The only difference is that you are using the bank's money for a portion of time, and not your own. That's a service that the bank is providing - if you don't need it, you wouldn't use it.

Again, my point is relevant. You still "need" money - you're just using a different definition of "need" than I am. I only really addressed the ones that really need money and don't have it in my last post.

It is amazing how the credit card companies have convinced us that we need credit and a credit rating. No we don't. And as for your several hundred cash back, well here's a fun statistic: the majority of people will spend 18% more when using a credit card vs. cash. so much for that rebate.

@DrMorison:

1. Yes, I'm familiar with the phrase.

2. That's very nice, but the Declaration of Independence has no legal force in the United States. When it was written, there WAS no "Federal government" - it was created by the Constitution, which is the legal basis for the the United States of America.

That's why large companies make a lot of money. The economies of scale mean that they are in a better position to withstand the tougher climate.

Also, customers aren't independent, as this site demonstrates. Intentionally trimming profitable customers (even marginally profitable ones) is a good way to end up broke. If you have unprofitable customers, it's usually a problem with the business and not the customer, though there are exceptions.

They are a company. They don't have hearts or community interests. It's like saying a "why doesn't this rock care about humanity?"

If you have a dispute with a vendor and use a CC, you haven't paid anything yet. Plus, the CC will go to bat for you and usually suspend payment until the dispute is resolve.

With a debit card, the money is gone. Getting money back is much more difficult than not sending the money at all.

Not sure what the specific protections on debit cards are. They're about the same as a CC if your card is lost or stolen, but if you're screwed by a vendor what's their policy/process?

@Fist-oâ„¢:

The only real way to stick it to the credit card companies is to max out your cards, cash in the merchandise & then drop out of society or commit suicide & give the money to relatives. I figure if I were to ever have a terminal disease.... I would do this.

The United States Declaration of Independence, which was primarily written by Thomas Jefferson, was adopted by the Second Continental Congress on July 4, 1776. The text of the second section of the Declaration of Independence reads:

We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

@JGKojak: Neither side is doing the other a favor. It's simply a business transaction where both parties hope to benefit from the relationship.

Under Capitalism, man exploits man. Under Communism, the opposite is true."
;-D

1. Loss protection. I'd rather go through the hassle of reporting a card lost than misplace a couple hundred dollars. I carry $20 - $60 in cash at the most.

2. Fraud protection. Better protection than a debit card if someone steals the number and starts using it.

3. On-line purchases. I'd like to see someone make the case that paypal is somehow less evil and/or prone to fraud and screw up than a credit card company.

4. Merchant disputes. I have requested a total of 2 charge backs in 18 years of credit card use, but I like to know I have the option.

5. Extended warranties and rental insurance. Extended warranties for large electronics purchases and insurance coverage for rental cars: Both free services. Both indispensable.

6. Record keeping. I don't want to think about the hassle of trying to track cash transactions. A debit card would get you the same thing, but there are other good reasons to use the credit card. Unlike some people who have posted in past "cut up your cards" stories, I am actually more careful about spending money on the card because I know I'll have to see it on the balance sheet at the end of the month. If I buy something with cash, I forget about it almost immediately. I've saved money by limiting the amount of cash I carry, and therefore spend.

7. Rewards. I put all household expenses and bills on a cash rewards card and get about $500 a year back. If EVERYBODY canceled their cards, maybe merchants could lower prices by 3%. On the other hand, I don't foresee Safeway, let alone Amazon or Newegg, offering a cash discount in the near future.

8. Special offers. I'll admit I applied for a Chase Sony card just so I could get a $100 back on my first Sony purchase. But hey, $250 PS3. Sweet.

I do have strict rules about cards:
I don't carry a balance.
I don't charge more than I currently have in my bank account (see previous rule).
I don't pay any annual fees.
I don't actively use more than two cards.
If a company tries to jerk me around by switching due dates, changing terms, or charging undeserved fees, they get one chance to set things right. If not, I cancel the card and get a different one.

The credit card companies offer a service. They make money off of it or they wouldn't do it. It is to my benefit in almost every way to use their service.

Works for me.

I only use my debit card to get cash from the ATM at the credit union, to buy gas from stations I know, and at the grocery store. I put everything else on my credit card. My credit card number was compromised at a retailer and over $3000 in fraudulent charges were rung up in one afternoon - and I didn't lose a penny. If that had been my debit card, my checking account would have been wiped out and I wouldn't have gotten any of the money back.

I've gone from having near-zero marginal cost...never talking to any employees, dealing entirely with machines, to costing a couple of bucks per call, maybe more...and it is ENTIRELY the fault of the credit card company.

So is the bank doing me a favor by lending me the money? Yeah, sort of. But it is not money that I need, or that I would not otherwise have. Basically, the extent of the "favor" is that the bank is allowing me to avoid dirty looks from people in line behind me at the checkout while I count out cash or write a check.

But really, why would anyone try to stick it to a company (or person) that they have a business relationship with? If you don't like the credit card company, don't use a credit card.

I think it's just a way for consumer advocates to rally the ignorant... kind of like voting, lol.

(disclaimer: if you can pay, do)

I am fortunate to have not experienced any credit problems. I don't use credit in my personal life just for business purposes, and that is still tooling along just fine, but for how long?

It is hard to @Allen Harkleroad:

It is hard to run a business without some sort of line of credit. I totally agree with you though. I don't have any personal credit cards.

With credit, there really are only two types of customers - those that have credit scores and history good enough to choose who they do business with, and those that do not have much choice who they can borrow money from due to poor credit history or past failures. Your post makes a lot of sense for type A, not so much for type B.

@Allen Harkleroad:

Well, your call, but it seems pretty silly to me to (a) forego extra interest, (b) not get the 2% cash back on every $ I spend, and (c) be put in a position when you have a dispute with a vendor or your credit card company where THEY have your money, and you need to get it back.

@kwsventures:

If you're going to be pedantic, we DON'T have the right to life, liberty, and the pursuit of happiness - that phrase appears nowhere in the Constitution.

@cabjf: It's an old fad become new. When credit cards first became popular, you would see the two different prices. Stations did away with them in order to attract customers. What we are seeing now is just a push back by stations to make a little more money to increase net earnings/stay afloat

And so what? Nevertheless credit card companies still seem to be selling cards, and their customers are buying.

Wow, everybody thinks they know how interchange fees work, but it seems like a lot of misinformation being posted. Here's a Credit Union National Association PDF about interchange fees that covers some of this.

At a very basic level - the merchant bank (e.g. the bank that Sally's Salon has an account with) pays a fee to the card-issuing bank (e.g. Capital One, Citibank, Chase ...) So yes, "your" credit card company makes money for every transaction you make with your card. However, does not get the full amount of the fee. Some of it goes to the network (e.g. Visa or Mastercard).

There's also some good information at creditcards.com, including this nifty animation.

@Trey Mahaffey: So if the comment isn't in line with your opinion, its a negative comment?

How about a differing comment?

I ODed my checking account once, my mistake and I paid the price....and now im getting a firestorm of credit cards from my bank.....recession...what recession...

Two words: Debit Card (or cash)

Screw credit cards and their usurious companies. I cut up 7 credit card threes years ago (business and personal) and I haven't had a personal or business issue that a debit card, check or cash couldn't handle since. (no interest payment, no late fees, no interest rate jacking, etc.). Screw Visa, MasterCard, AMEX and the rest of them!

But it's more likely I don't know what I'm talking about and in reality the companies just think it's fun to pull stunts to get us all lathered up.

But they do. All companies do. Or else you eventually run out of customers. The banks appear to be operating as if they are a trailing-edge technology company. As demand drops, the price goes up, and eventually there is no longer a market for the product.

And perhaps, as the good consumerists we should be, the market shouldn't exist as it currently stands. You know, Credit Unions could really take advantage of this and clean up.

If you cancel, then you're not really hurting them, per se; you're just not even in the game any more. I suppose the only way you could ever "Stick it" to them is through political activism or consumer activism.

Thank you for this post.

I don't understand the people who post such ridiculous comments, seemingly forgetting that YOU are the customer, they are NOT doing you a favor by letting you have one of their precious cards.

This sort of thing seems to be more and more common these days, with everyone scrambling to cover their rears as they are audited, trying to prevent yet another failing bank by essentially manufacturing favorable-sounding numbers for whatever today's purpose happens to be.

Actually my mother in law just got approved for a pretty high limit card with AmEx. So it is true that you can still get credit. But I guess it does go in the companies interest to think you can't and that your are stuck with the new high rates.

Another reason not mentioned is that due to the economic downturn, the chance of a person losing their job is much higher. Losing a job means that you'll be tempted to use a credit card to get you over the hump and won't pay off the full balance. So, they jack up rates in anticipation that it happens.

Essentially, the banks are those gas stations that charged $6/gallon after Katrina because they could get away with it and they knew you needed them.

This is true, but misleading. The statement I usually hear around here (and have said myself) is "When you pay your balance in full each month, you lose the bank money."

Visa may make money on the verification of the transactions, but it is your bank that is loaning the money. Visa does not provide the credit card, the bank does. And when your card is canceled or your rate hiked, Visa was not a part of that decision (save for fraud).

@B: Do people actually think that?

LOL

Unless the bank that issued your card is also the bank that's processing credit card transactions for the merchant, your bank doesn't get anything from the fees. It's Visa/MC/AmEx/Discover that get the merchant fees as well as the bank that handles the merchant's processing account. That's the breakdown I got from a payment processor years ago when I thought about accepting credit cards for my business.

The Payor's bank only makes money off of interest (except with AmEx whom also makes money off of membership fees and merchant fees).

Now I don't know if Visa or Mastercard share any revenue with banks that issue cards with their logos, that information I was not privy to.

funny how many people's comments on here fall into the above mentioned categories.

@B: In capitalist America, the man sticks it to YOU!
err..wait, that's what happens anyways. Sorry.