credit & debt

Credit vs Debit

I just finished checking the balance of my credit-card reward points: 13,282, racked up over the past three months.

Why I Love My Credit Card

I just finished checking the balance of my credit-card reward points: 13,282, racked up over the past three months. Basically, Chase is giving me a $132 rebate in exchange for putting all my purchases (even my morning coffee -- who needs all that loose change?) on my credit card. Because I pay off the balance every month and there's no annual fee, this is a windfall.

I get another huge benefit for using my plastic responsibly: a sterling credit score, which has provided access over the years to low-rate mortgages and car loans. When cash flow is tight (I have two kids in college), I've taken advantage of zero-percent balance-transfer offers, but I pay them off before the rate spikes. I've never been a victim of fraud, but when I've had billing errors, my card issuers have dealt with the merchants. Yes, there's a temptation to spend beyond your means, but used in the right way, credit cards are a great (and rewarding) moneymanagement tool. MARK SOLHEIM

The Case for a Debit Lifestyle

Sure, you can use credit to your advantage. But the truth is, many of us simply don't: Nearly 60% of credit-card holders don't pay off their balances each month. Credit is a too-easy-to-accept invitation to break your budget on a regular basis. As a result, this significant majority of credit users regularly lose money in the form of compounding interest payments and other fees. Over time, those debts accumulate into obstacles to reaching your financial goals.

That's why my wife and I own no credit cards. We use debit cards (or cash and, on occasion, checks) to pay our way through life. We don't spend what we don't have. By using our Visa debit cards, which can act like credit cards, we've never had problems renting cars or booking hotel rooms. And by signing for purchases rather than using PINs, we get virtually the same protections as credit users. We also benefit from one less bill to pay, one less account to monitor, one less source of debt to overcome. ROBERT LONG

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