Is Your Credit Card A Tool… Or Are You?

Which one is the tool?

(How many tools can you spot in the picture above?)


Defining The Word “Tool” has several definitions for the word “tool.”  For our purposes we will review two that happen to be back-to-back:

5.  anything used as a means of accomplishing a task or pupose

6.  a person manipulated by another for the latter’s own ends

Or if you are looking for a little more flavor, Urban Dictionary defines “tool” as:

One who lacks the mental capacity to know he is being used… or, one of those chic’s who holds the sign saying “Carson Daly is Hot.”

Feel free to use whichever one is more comfortable for you.

The Two Credit Card Extremes & The Big Fuzzy Gray Area

In the blue corner, we have the anti-credit crowd. They are a mixed group.  Some responsible, some not.  United by the swearing off of credit cards.  They are a rare breed and have been known to be passionate, but a little intense at times.  They relish the freedom and security that comes with rejecting what others may call “tools.”

In the red corner, we have the responsible credit card users. That’s right.  I acknowledge their existence, although they too are an exception to the norm.  They are the “guns don’t kill people, stupid people kill people” crowd.  I get that.  A credit card does not know good or evil, after all.  This corner focuses on taking responsibility to wield these “tools” to minimize any overspending, while maximizing the convenience and rewards.

The “big fuzzy gray area” is where normal people roam.  They still utilize credit cards, but not with a great amount of responsibility.  I know from experience, the real problem is that it’s common to be claiming membership in the red corner while your actually just lost in the sea of gray. Unfortunately, our current culture encourages people to stay lost.  They want you to find a cozy clearing and set up camp.  You see, there are some external forces that benefit greatly from our grayness.

The Fat, Old, Ugly Men Behind The Curtain

At least that’s how I like to view them.  I’m sure there are women executives at the credit card companies, as well, but it just doesn’t flow quite the same.

The credit card industry is not your local mom and pop shop.  As of 2006, there were over a billion Visa credit cards, accounting for over a trillion dollars of annual volume.  The average credit card debt of a household, which uses them, is over $10,600. Despite our color, we can all agree that things have gotten a out of hand lately.  We know that balance isn’t getting paid in full every month.

You see, the credit card companies have found something that’s much more valuable than gold or fancy watermarked paper.  They’ve discovered the power of passivity.  They’ve found that they can bottle it up and churn it out as a little piece of plastic with some random numbers.  We as a culture can’t get enough.  We will do anything to avoid unnecessary action. They’ve made it way too easy to maintain, to put off, to find excuses.  As a group, we’ve morphed into a bunch of rhinos in heat.  We just blindly charge anything that comes into our field of vision.

Meanwhile, the people pulling the strings are laughing. They’re having a jolly ‘ole time.  They quickly count their money before injecting a large percentage of it back into advertising and marketing.  They’ve sold us so hard, for so long that we literally can’t imagine a world without their “tools.”

Who/What Is The Tool In Your Life?

This post isn’t about Red vs. Blue.  It’s about Gray.  It’s about gaining awareness. I’m not calling you a tool if you use credit cards, although you certainly might be one.  I’m simply calling everyone to take a honest look at their financial habits to ensure they are helping them achieve their goals.

I know the value in this type of reflection, because I spent the first several years of my adult financial life as a the picture-perfect chic holding the “Carson Daly Is Hot” sign.  Throughout college I used credit cards to finance an inflated lifestyle that I was certain I was entitled to. For example, I once rented a house with a pool along with several of my guy friends.  Upon installing a pool volleyball net, we quickly grew tired of retrieving the ball once it got ejected into the back yard.  Our solution?  We drove in our swimming suits to the nearest Target and charged 12 volleyballs on the spot.  Ladies and gentlemen, Carson Daly doesn’t get much hotter than that.

After getting married, I was slowly able to educate myself out of this phase.  For a brief while, our credit cards actually took over the role of “tools” in our lives. After around a year of truly responsible use, we began to question their actual effectiveness.  Were we missing a piece to this puzzle? After all, the credit card companies had several decades of experience and several billion dollars to their advantage.  On the surface we felt responsible, but deep down we still had a feeling of being “manipulated” in some way for “another’s gain.”  We took out the scissors, picked up the phone, and never looked back.  We love being blue.

Chances are your experiences are much different than ours. You might be bright red;  champion of responsibility.  Or you could be a nasty grayish-pink color, like I was during my transition.  Maybe you were blue, before blue was cool.  I don’t know.

Whatever you do just don’t assume your know your color. We all know people who’ve done this in our lives.  Some of us need only to look in the mirror.  Wake up.  Educate yourself. If you don’t like the color you find, the good news is you can always change it.

What’s written on the sign you are holding?

Are you red, blue, or gray?  What’s your take on all of this?  Do you think I’m the biggest tool of all?  Join in on the conversation by adding your comment below!

40 thoughts on “Is Your Credit Card A Tool… Or Are You?”

  1. I love the title, and the post in general – a unique analogy on something that’s been talked about for years.

    I would have to say I was in the ugly gray range for a while, but have since also emerged blue. Once you realize that a credit card is not the “emergency tool” it’s hyped up to be, and you start saving for what you actually want (and those unexpected expenses), credit spending comes to a grinding halt without much effort.

    The debt repayment part is a little harder, but step 1 is to just stop digging the hole…

    Wojciech @ Fiscal Fizzle’s last blog post..What Types of Accounts Should I Open?

    1. Thanks for the kind words! It’s sounds like we had very similar experiences with out credit card usage. I felt the exact same way about having my credit spending slow naturally once I started on the right track.

  2. I’m definitely in the blue corner, though I have very reddish-gray friends that make me doubt my stance at times. I start to wonder if the rewards are worth it if I use the card responsibly… But I look back and see that while I was never a big credit card abuser, it certainly made it easier to pick up the tab and regret it later!

    I just had a conversation with a friend that swears he doesn’t spend more using his card and he gets the rewards. He also mentioned that he tips more when using his card b/c it gets him more points. Duh! That’s spending more! “No it’s not, I still pay it off each month.” I think I’m better at math than him. :o)

    1. Amy, I have a lot of friends like that in my life too. It’s so hard to really know how our spending is affected unless we’ve tried both methods first hand. For some there is no difference, however some like your friend do have a mentality shift.

      Thanks for commenting!

  3. In college and shortly after, I was gray. For the past decade, I have been firmly red. We churn quite a bit through our card every month in order to get the rebates – using it at Target, Taco Bell, basically any place that takes a card. However, we’re not taking advantage of our cards to buy a dozen volleyballs. Our purchasing habits are the same as they would be if were paying with nickels – we’re simply choosing a different payment method. The payment method SHOULDN’T change the purchasing habits, although it often does.

    kosmo @ The Casual Observer’s last blog post..Giving ‘em the bird

    1. I think you pretty much summed it up in your last sentence. It shouldn’t, but often does. It’s awesome that you know your spending isn’t affected. Despite which color they end up in, we need to help people get away from that nasty gray stuff!

  4. I have always been “red”. Even in high school I had a credit card that was basically my Mom’s with my name on it. Brave of her, I know! But, I’ve always been very responsible. She basically wanted me to do my own school clothes shopping and the grocery shopping and other errands for her. She would have taken it away from me if I had not used it responsibly. I was very conscientious of the fact that it was her money I was spending and I should choose wisely. I think this actually taught me a lot and is one of the reasons I never got into credit card debt.

    Also, it actually hurts me a bit more at the end of each month to pay my big chunk of a credit card bill from what could have been savings. I’m a saver. So, as I track my spending in Mint, I tend to actually spend less as I see my credit card payment creeping up and up. Spending cash really doesn’t bother me that much. I don’t see it leaving my checking account the same way I see it leave when I pay off my credit card each month. $10 and $20, even $80 just doesn’t hurt me the same way as when I pay off over $4000 all at once (our flights to Australia were on this month’s bill)! THAT hurts! And motivates me to save more next month.

    MB’s last blog post..April According to Mint: Infrequent Bills

    1. Wow, I think you are really lucky to not have struggled with credit cards early. Some mad props to your parents probably! It’s awesome to hear about the specific methods you use to ensure you keep the credit card spending in check. It seems like having that “savers mentality” is a crucial part of being a power-red ;-)!

      Btw, less than 5 weeks til Australia! We will have to chat more as it approaches.

  5. I love the way that you wrote this post. It works well with your sites theme – ManVsDebt. Very aggressive, redvsblue and all that.

    I think that we have to remember that using a credit card can be addictive. So a lot of the “grey” area people look at the blue group, the spenders, and think to themselves that they are not in that group. But they’re in denial. They don’t want to admit their problem, so they ignore it, pretend it isn’t there, embrace ignorance.

    At the same time, I think a lot of us (myself included) think that we’re firmly in the red, without realizing just how much extra we’re charging each month because of convenience. I think we dip our toes into the gray on a regular basis, and again, we just politely decide to ignore our indiscretions. We buy something off a website that we couldn’t without a credit card. We buy something on credit a few days (or weeks) before we get paid, we tell ourselves that this $3 purchase (or add-on) will be offset by our cashback savings. I think we are a lot more gray than we realize.

    Alan @ Saving For Serenity’s last blog post..Saving Money On Our Cell Phone Bill

    1. Thanks! You really connected to dots and got the underlying message I was trying to get across. That’s awesome!

      By the way, I kind of experimented with a different style of writing and I’m glad you enjoyed it. It feels a little more natural to write this way for me :-).

    1. That’s an interesting approach. I’ve fumbled around with using them myself, because I do think the slate is clean in our current situation. At the end of the day, though we still enjoy the benefits more than the drawbacks! Thanks!

  6. Nice article! I’m definitely still in the gray, but successfully removing the debt in a final cycle which I hope won’t be repeated again. Three months ago or more I realized that if I don’t actively work harder to pay them off now, it’s going to take me two more years of having these balances before I get them paid off. And I don’t want to see these credit card balances for another two years on my balance sheets!

    You’re right about the companies; they’ve designed it so they make their profits from people not willing/able to pay. This isn’t the only way they make their money (alot of it is from the electronic transaction fees), but definitely a lot of it. Another solution? Pay off your debts, then invest in Visa stock!

    MoneyEnergy’s last blog post..How Will You Spend the Money From Your Parents’ Estates When They’re Gone?

  7. Hahaha! I nearly spit my coffee out when I read the title!

    If something is going wrong with your life, then you need to start by taking a look in the mirror. Great article!

  8. Great post.

    Most of us get into trouble with credit cards at one point or another, some turn blue, and never touch credit again. Personally, I fell into the red column after my fall, and I now pay off my bill at the end of each month.

    Using credit card as a convenience card has many benefits, especially with cash back, air miles and other perks that some cards offer. You are absolutely correct, people will take the path of least resistance, but being honest about money (awareness) can help you make the credit card the tool and not you.

    Is that not the ultimate goal here, to have your cake and eat it too?

      1. lol, fair enough…I can respect dissenting views.

        BTW, I came across your blog last week, and I love it, I’m also checking out all your friends blogs too. Keep up the good work!

        1. Haha, I hope that didn’t come across the wrong way! I was trying to be funny.

          Thanks so much for all the support. I have a lot of great blogging friend who all do amazing stuff. Most of them stop by and comment regularly so this is a great place to find some helpful links!

  9. I think I can safely say I am deep deep red.

    An above commented mentioned that their friend uses credit cards and tips more. When I go to a bar/restaurant with friends I find I tip less on credit since I’m not tipping every drink.

    I also scrutinize every purchase like crazy. It’s a sickness, really :/

    I liked the style of this post 🙂

    MLR’s last blog post..Can I Get a Job with a Misdemeanor?

    1. Glad you enjoyed the style. You and her friends different life experience is exactly what I was referring to as the red vs. gray comparison.

  10. Love the title! You’re only a tool if you carry a balance so I guess I’m in the red camp.

    Unfortunately, or fortunately depending on your point of view, there are enough people who do carry a monthly balance so folks in my camp can get free flights to Cancun or get a 2-3% cash back award for using our CC cards wisely.

    I frequently tell people who carry a CC balance to keep paying minimums so they can send me on freebie vacations. They usually start paying down their debt ASAP.

    Matt SF’s last blog post..Weekend Reads: the Don’t Forget Mother’s Day is One Week Away Edition

  11. I was decidedly gray for most of my early adulthood, and have moved more into a more plum shade – blue with just a bit of red for convenience. With the exception of large purchases like airline tickets or hotel reservations, cash is king with me. It’s a visual thing – I can see myself breaking that last $50 in my wallet for the week, where what I was spending never seemed “real” to me when I used credit cards for everything. Fixed monthly bills are all direct-pay, so it’s only discretionary spending done in cash. Once I made that change, after 2 years the only debt I have is my mortgage.

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  13. First Adam just wanted to say that I think you have started a great blog and enjoy reading your posts!
    Thought provoking and begs to really ask ourselves about financially responsibility and accountability.

    Even though I have been in the grey area of not necessarily being “truly” financially savvy or knowledgeable until 6 months ago, I have never carried over credit balances PERIOD. And as of this month, carry absolutely no debt whatsoever since I just finished paying off my car loan 17 months early. I paid off my student loan within 2 years after school. I am sure I will get back into debt when I apply for a home loan sometime in the future(trying to now saving 20% for down payment) but for now can honestly say I don’t owe anybody any money period. w00t!

    That being said credit cards can be dangerous for those of us who at one point or another, chose to not bear our responsibilities properly when using a credit card. I never really did understand how people could rack up so many charges on their card…. it baffled me to to hear how my friends in college had thousands of dollars in debt. I only charged what I knew what I could afford to pay off that month.

    About a few years ago, I was spending on average $500-600 a month but when I got a huge raise, my charges where more near $1500-2000 on average (still always paid in full). But nevertheless just because you got a bump in income doesn’t mean you need to bump up spending as well and took me about a year to realize how dumb I was being and spending on frivolous things. I have cut back and gotten my charges back down to the “norm” of ~$650-700 a month now.

    One thing to note is, I would bet the rewards system with credit cards would disappear if everyone paid their debt in full. It’s the people who carry balances who make the credit companies money and to retain/attract more potential clients who may carry balances, entice people with “rewards”. Seriously, the rewards the credit card companies pay out is less than pennies on the dollar that they bring in with finance charges and late fees. Even if ALL people paid balances in full, the credit cards would still make money from the businesses who pay anywhere from 2-4% to the credit company for the transaction fees.

    That being said, I am definitely in the RED corner. To each their own and people should do what works for them. As you have pointed out, it is not about red vs blue, but about gaining awareness and true understanding of our personal finances.

    It’s always a learning experience and I still learn so much every week, but the basic building blocks of financially awareness have already been laid for the foundation and I am constantly building up and making adjustments too.

    Since I primarily use my credit card for almost all purchases/bills, I am able to track my spending efficiently and quickly which makes budgeting so much easier.

    I can honestly say (as I am sure you would agree) that being young (mid-late 20’s) to have come to such an realization the importance of our financial health is such an amazing thing since I don’t think most people really start understanding until it’s really too late (buried under a mountain of debt) or much later in life when we look back and say I wish I did things differently in my 20-30s (though I am sure we can always look back to wishfully ponder the what-ifs :-P).

    Okay sorry for this little rant but just wanted to say I’ve really enjoyed reading your blog and keep you the great work!

    1. Clayton, please don’t apologize for the “rant.” I felt it was a thoughtful and constructive comment. I really appreciate you taking the time to add your value to the site!

      I, too, feel honored we’ve been able to learn this at a young age. I’m not taking anything for granted. I’ve feel the pulls of debt and consumerism on a daily basis still. I’m just glad we are on the path! The future looks awesome!

  14. Beautiful article… this is what blogging about personal finance should be. Not coupon emails or turning your power off to save a few bucks but humorous illustrations of our own failures, rationalizations, and real opportunities for life changing improvements.

    So now that you know how I feel…. allow me to elaborate even further.

    Dude, you killed this one. I love the imagery and humor. The line about horny rhinos charging everything in site is as classic as it gets. Every PF blog article would automatically improve simply by adding this line… hmm, I might have to do that myself.

    And that’s on top of the instant classic article title.

    But you also hit on a very serious issue in our current environment. The profitablity of passivity… if the credit card companies can keep us numb to our balances then they’ve effectively created a really good annuity for themselves. All they need to do is keep us comfy and cozy with our tricked out swag and fat balances and they’re on a pretty smooth path to great wealth.

    Geez, funny and smart… I’ll be the one holding the “this article is hot” banner!

    Great stuff… and officially the first post I’ve tagged for my next roundup!

    Thanks Baker!

    Do You Dave Ramsey?’s last blog post..Bad Money Decisions

    1. Thanks for the kind and genuine words, Dave. I’m really glad you connected with the article so well. I enjoyed writing with this style and passion and your encouragement helps motivate me to do more of it!

      By the way, I’ve seen that rhino joke in a book before, but it was boring so I spiced it up and added “horny.” Nice touch, huh?

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  17. Great post, but I have a comment. The Americans who pay the credit card bill in full are not “an exception to the norm” we are 43% of credit card users. That is almost half.

  18. Good stuff! I’ve been in all corners I guess. I’ve been an abuser, a non-user and a responsible user. Basically in that order. Although we never carry a balance and pay it off every month, I have noticed especially recently how easy it is to spend more with the credit card. It’s just easier to pull the plastic out and justify the expense. Something to be careful and mindful of.
    .-= Jason @ Redeeming Riches´s last blog ..How Much Money Do You Need to Retire? =-.

  19. Having a credit card always has its perks. Just like any other thing, it is about responsibility and how we manage them. Mismanagement would definitely lead us into misery. But, if we use our cards wisely, we could cruise along comfortably.

    Well written!

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