4 kinds of people who hate credit cards
Credit cards are convenient and offer protection against theft and loss -- and, of course, some offer miles and other rewards. Not everyone is enamored with plastic, though.
It's easy for people to see the benefits of using a credit card. They offer the convenience of carrying around cash, while having protections against loss and theft. And rewards credit card holders can earn valuable points, miles or cash back when they use their cards to make ordinary purchases.
For merchants, credit cards offer a quick and easy way for customers to pay for their goods, and credit card payments are less vulnerable to fraud and theft than cash or checks. Furthermore, credit cards make it easier for customers to finance their purchases, which can increase sales.
Nevertheless, there are some people who simply hate credit cards.
1. Cab drivers
Taxi cabs were one of the last places where you couldn't use a credit card, and many cab drivers are not happy now that customers are increasingly using their plastic. In 2011, the Boston Globe reported that some cab drivers had to pay a 5% or 6% processing fee on credit card transactions, and then an additional $1.50 fee to withdraw cash from their accounts. (Though in Seattle, cab drivers were reportedly using their mobile phones to process payments with lower fees.)
2. Small-business owners
Business owners certainly have a love-hate relationship with credit cards. Sure, they do save money when customers use credit cards, as handling cash and checks takes time and makes them more vulnerable to theft and fraud. On the other hand, they have to pay merchant fees that credit card networks charge them for processing credit card payments. Convenience store owners complain that the market for credit card merchant fees is uncompetitive, and that the payment networks are earning too much profit. Yet their protests might seem a bit hypocritical to those who just paid $5 for a quart of milk.
3. Credit card users who are in debt
Convenience can be both the primary benefit and the main drawback of credit cards. Those who use credit cards simply as a method of payment avoid interest charges by paying each month's statement balance in full and on-time. On the other hand, some cite the convenience of credit cards as part of the reason that they overspend and go into debt. Since credit card debt is unsecured, interest charges can be costly and cardholders can have trouble paying off their balance. In the end, those who struggle with debt end up hating credit cards and may need to stop using them to control their spending.
Credit card debt doesn't just have short-term effects like interest charges either. Debt has a major impact on your credit scores. If you want to see how your credit card debt is affecting your credit, you can check two of your credit scores for free every month on Credit.com. You can also get your credit reports for free every year from AnnualCreditReport.com to check for mistakes or other problems that are hurting your credit.
4. People who don't know about the Credit CARD Act
The Credit CARD Act is a landmark piece of consumer protection legislation that ended many of the most unfair and deceptive practices of the credit card industry. In the past, credit card issuers practiced an insidious form of accounting called double-cycle billing, in which cardholders were essentially charged interest on purchases that they had already paid for. Cardholders were also subject to "universal default" clauses where they could have their interest rate raised because of problems with other accounts, even if they always paid their credit card bill on time.
For the most part, the Credit CARD Act addressed these and other problems with the credit card industry. However, bad memories die hard, and many people still have a negative view of credit cards based on their experiences before the Credit CARD Act.
More from Credit.com
- How to avoid credit card late fees
- How to pick a low APR credit card
- Should I close a credit card account?
It's a love-hate relationship,
The credit card user loves the purchasing power, but hates the monthly bill.
The retailer loves the extra business, but hates paying the merchant fees.
Tell us something we don't know.
For me, it's CASH or crash! If I don't have the cash then I can WAIT or not buy it! THAT is discipline people!
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