Credit Cards?

By Glenn 
I have a mostly positive history with credit cards. The first one I ever had was jointly held by my parents and I. It let me build up some positive credit without ever being in danger of getting in over my head. When the time came for the Democrats to take control of Congress in 2006, I decided to finally venture out and get my own card. This would lead me down a road that killed everyone I knew but taught me an important lesson about living within my a personal budget.

I got an American Express card in 2006 with a 16 month grace period. That means for over a year I was able to purchase things, carry the balance over and not have to pay interest. This was perfect for me because I've always loved buying things but hated paying for them immediately. For some strange reason American Express decided to give me an $8,000 limit - so I tested it by buying $7,000 worth of TVs and then returning them a few days later. I found out the limit on that card was indeed $8000, but never counted on how much I'd enjoy having those TVs. In any event, I was glad to have the card and it got me out of some tough blinds. (That was not a typo - I was actually stuck in some blinds in 2007.)

If you fast forward - not unlike what you'd do during several scenes of the movie Showgirls - a few years you'll see a very despondent image. Imagine me sitting on a couch watching Judge Joe Brown on a TV that only gets five channels. Now imagine me without a job, not on speaking terms with my roommate and riding my bike to the public library daily. That was me in the Spring of 2009. Since I was still spending money but not really making any (does unemployment really count as "making" money?), I decided to go down the path of credit card-ism once again. But what card to get?

Some of the credit card commercials of the past five years will always be remembered for tugging at people's emotions. Jerry Seinfeld did commercials for American Express and Seung-hui Cho made a posthumous endorsement of Diner's Club. The phrase most often associated with AE was "don't leave home without it." The phrase most often negatively associated with AE was from VISA commercials with a message akin to "When buying a child prostitute, the pimp may accept your denials of murderous tendencies, but he won't accept American Express." There are a decent number of places here that don't take AE cards so I decided to go with VISA instead.

The day before I applied for this new VISA card I flew to San Francisco to meet with their CEO at company headquarters. I told him that I needed at least six months of 0% APR and he told me that was fine. After four more hours of negotiation I walked out of that building with a brand new VISA card with 0% APR for six months and a promise from me that I would use the card responsibly. And so far I have.

So now I'm at a point where I have a VISA with a $4,000 limit and an American Express with an $8,000 limit. My APR on each ranges from 10.99% to 120%. My VISA is accepted more places but I can't make a $1500 purchase with that card unless I receive their permission ahead of time. Even my parents aren't that strict with large purchases. The new credit card legislation passed by Congress this year now demands that these companies be more straightforward with people about rate increases, penalties and corporate murder at the yearly staff retreats. This means that now is one of the best times to get a credit card.

Credit cards are like a loaded handgun amongst a group of drunk teenagers. They can just as easily be used for good as evil. The objects themselves - plastic, magnetized and filled with tiny crystals of uranium - have no inherent value. But if you're able to use them on big purchases and as an aid to avoid living paycheck to paycheck, they can make your life better. If you use them to finance a trip to Europe (a "Eurotrip" if you will) without stealing gold from victims of the holocaust, you won't be able to pay your balance. That's when bankruptcy happens. Live within your means, whether you own credit cards or not.