Credit Cards: Friend or Foe?

09/03/2026

Credit cards can be a controversial topic. Some people obsess over them, and some fight ferociously against them. Here's the truth: a credit card is a tool. Used well, it works for you. Like any tool, it can benefit you or harm you depending on how you use it.

What credit cards do well

They reward you for spending you were already doing. If you pay your balance in full every month, cash back and travel points are essentially free money. Many cards offer specific rewards tailored to your wants, and many offer more rewards for specific purchases.

They protect you. Federal law caps your liability for unauthorized charges at $50, and most issuers offer zero liability. With a debit card, a fraudulent charge comes straight out of your bank account while you sort it out.

They build your credit. On-time payments and low balances make for a strong credit profile, which can mean better mortgage rates and lower insurance premiums.

Where they bite

Interest adds up fast. Credit card rates are among the highest of any kind of borrowing. If you carry a balance, the interest will quickly outrun any rewards you've earned.

They make spending easy. Swiping a card doesn't feel like parting with money the way handing over cash or instantly seeing the money come out of your bank account does, and studies suggest people tend to spend more because of it.

Minimum payments are a trap. Paying only the minimum can stretch a modest balance out for years and cost you far more than the original purchase.

Fees add up. Annual fees, late fees, and foreign transaction fees can quietly eat into the benefits.

Myth vs. Truth

Myth: You can’t book a hotel without a credit card.

Truth: Many hotels allow you to use a debit card instead, and you can almost always book ahead of time.

Myth: You can’t buy a house without building credit via a credit card.

Truth: You can go through manual underwriting to get approved for a mortgage without having a credit card.

Should you use them?

Be honest with yourself. If you’re disciplined, organized, set up auto pay, and/or create a good system, a credit card can benefit you. If you spend emotionally, don’t plan ahead and have an “I’ll worry about it later” attitude, avoid a credit card.

If you pay in full every month and track your spending, a good card is hard to beat. If you tend to carry a balance, the math works against you, and paying down existing credit card debt is likely the best "investment" you can make right now.

A simple checklist

• Pay the full statement balance every month

• Set up autopay so you never miss a due date

• Keep your balances well below your limits

• Choose a card whose rewards fit how you actually spend

• Review your statements regularly

Your credit cards should fit into your bigger financial picture, not drive it. If you'd like help building a plan that does, we're always glad to talk.

*This is not meant to be an exhaustive list. This is simply a baseline to follow. Please talk with me about your specific situation. I never charge for meetings or advice; I only get paid directly from investment accounts that I manage.