banktime.com

Until recently, the tale of American consumers and their plastic was a passionate one. As a nation, we really liked our credit cards. From the time when federal deregulation (in the 1980s) made it easier than ever before for average middle class citizens to obtain credit, the usage of credit cards grew steadily. That was, until the onset of the economic event now being called The Great Recession. Now, it seems that the harsh financial realities of the past three years may be causing something of a revolution with regards to the use-use-use plastic mindset. When Congress finally wised up and started paying attention to the criminal practices of credit card companies last year, it was as if their notice triggered something in the collective national consciousness.

Across the country, consumers have had it with the people who issue their plastic. Rates have been hiked, credit lines have been cut, and it seems like every month they are rolling out a new fee meant to punish someone. Fees for running your balance too high, fees for not carrying a balance, annual fees across the board… these companies are leeching our lifeblood at a time when the average U.S. household is slowly being bled dry. And the backlash has already begun.

Studies show that American credit card use is on the decline, while debit card use has skyrocketed. The Federal Reserve released information showing that last year marked the largest one-year drop in revolving credit in U.S. history – a twenty percent decrease over 2008. More interesting, even, is the fact that the amount of new credit card accounts opened last year dropped by forty-six percent. It seems that Americans are in a national trend of paying down debt and saving money as they can. Analysts predict that these times will give rise to an entire generation of citizens who refuse to utilize credit cards.

Of course, there are both pros and cons associated with that kind of extremism. At the end of the day, it simply cannot be denied that using a credit card affords you several benefits that you can’t get anywhere else. Predation from your lender notwithstanding, using a credit card is much safer. You get unparalleled transaction protection in the form of fraud safeguards and extended warranties. If you identity were to be stolen, you carry much less liability (sometimes even zero) for fraudulent charges made to a credit card in your name, versus money lost immediately in your checking account. Also, the responsible and prudent use of a credit card is definitely one of the best ways to build or improve your credit history. Studies have shown that consumers holding at least one credit card tend to have FICO scores of around one hundred twenty points higher than those who do not. Also, good luck booking a rental car or hotel room without handing over a card to secure the transaction.

All I’m trying to say is, don’t throw the baby out with the proverbial bathwater. You can liberate yourself from the tyranny of feloniously greedy credit card companies and go almost completely cash-only, but don’t throw out the plastic completely. Save it for large purchases, those made online, or in instances like those already listed. Pay off your balance in full before the next month, and your card company can’t milk you for ANYTHING.