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A Personal Look at Credit Cards

A Personal Look at Credit Cards

My next-door neighbors on both sides of my property have houses that look a lot like mine. Sometimes my wife Maggie and I joke that they have kids that look a lot like ours, too, but that's just because they're all in the same soccer league. Our three families are pretty close in age as well. Our son Michael plays on the same team as Nick Anderson, the son of our neighbor to the right, and our daughter Angie is on the same team as Sarah Hamilton, the little girl in the house just to our left. So you might say we all have a lot in common. The truth is, we do... and we don't.

The Hamiltons are a great source of pet-sitting jobs for Angie. In the summer, it seems they're off on vacation almost every other week. Once when I was talking to Eric, Sarah's father, he said, "You only live once, right? Might as well make the most of it." It was in that same conversation that Eric told me about one of his strategies for maximizing his family's fun. "You know all those credit card offers you get in the mail?" he asked. "Zero percent interest for six months? Well, I just apply for those new cards and transfer my balances onto them. That way I'm never paying interest on the money I spend. When my six months are up, I switch to a new card with a new 0% rate. We can spend a lot more that way without paying a whole bunch of interest."

I listened to Eric's idea and just nodded. I get those offers in the mail, too, but Maggie and I already have three credit cards that we've had for years, and I don't foresee us closing any of those accounts any time soon.

On the other hand, when Mike and Nick chose to be roommates in the hotel at the regional tournament last year, Nick's father James came over to ask if I would secure the hotel room with my credit card. He handed me cash for his half of the bill, but explained to me that he never used credit cards. He said he had come to the conclusion a long time ago that the only time it was safe to use a credit card was when you didn't really need to, and that seemed to defeat the whole purpose of having the card in the first place.

I have to chuckle at both my neighbors. Eric's strategy, while it sounds smart, may bring down his credit score if he's not careful. And how James qualified for his mortgage without an open credit card on his credit report is beyond me. Of course it's none of my business, and I certainly don't mind listening to Eric or using my credit card to guarantee a hotel room for Michael and Nick on James's behalf. Just like my house, my views on credit cards fall right between theirs.

Maggie and I regularly use three credit cards. We keep our balances manageable and are careful to make at least the minimum monthly payments on time. Unlike Eric, we'd rather not hop from card to card

for the promotional rates, because we realize that the credit reporting agencies are looking for a good long payment history on a card in order to score us well on our credit report. Each of our three cards has that long positive history they're looking for.

And while James is right that using a credit card to pay for items you otherwise couldn't afford can lead you into unmanageable debt, he's missing the point of a well-managed credit card, and that is building good credit. A solid credit score can also be built and maintained with other trade lines such as signature loans or mortgages, but credit cards are arguably the easiest way to establish and maintain a high credit rating.

Thanks to soccer, Michael and Angie are both learning how much each player position on the team contributes to winning the game. I'm glad they're meeting so many children their age who have different lifestyles and different viewpoints, including our neighbors. When they get old enough to open their own credit cards, I'll be coaching them away from opinions like the ones on our left and right. On something as important as building credit, I'd rather they stick, like me, closer to center.


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