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Debt Begins When You Swipe a Credit Card

Today I’m guest posting and commenting at the Debt Free Guys. Join me there by following the link below. I’d love to hear your take on this topic.

credit cardsI often hear people justify their use of credit cards this way, “Well, I pay it off every month so it’s fine.” The implication imbedded in that statement is that they are not really going into debt if they pay the card off at the end of each month. The balance is zero so there is no and never has been any debt.

That mindset could not be more wrong.

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  1. I will agree whole heartedly. My debt problem started when I swiped the card.

  2. This is an interesting point of view. I never considered my credit card bill to be debt because I do pay it in full every month, without fail. Just wondering, do you also consider your electric etc. bills to be debt? You owe the electric company from the moment you flip a switch to turn on a light. Not trying to be antagonistic, just wondering how you approach other monthly bills.

    • “…do you also consider your electric etc. bills to be debt? This is a great question Kathy! Technically I’d say you are right in that you owe them the minute you turn the lights on. Things like electric, gas, water use, etc. that bill you for past usage still require a specific due date for payment. In my mind that moment when you are faced with paying the bill is the same as the transaction point one might face at the checkout when using a credit card. The difference between the two is that with a credit card I choose to push the payment down the road, thus going into debt. With the electric bill I do not, I pay it at that moment. I view utilities more like a written contract…they provide a service for which I pay…otherwise they’d shut me off until I do. 🙂 That’s how I see it.

  3. Thanks Brian. It’s a thoughtfully written post. I know a lot of people argue in favour of credit cards on the grounds that they give you breathing space, that they help you track your spending, and my favourite “you just have to remember to pay off the balance at the end of the month”.

    The banks aren’t stupid though… they know we’re weak and they know we overspend: why else would they be so keen to encourage us to spend money on plastic that they’d offer us reward points for every dollar we spend?

    • “The banks aren’t stupid though… they know we’re weak…” As a society in general that’s true. Like any other business, the banks are out to make money for themselves and they’ve found issuing credit is a great way to do that.

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