Everyday Cheapskate: Credit is a privilege, not a right | Advice


Dear Mary: I just found out that my parents are being discriminated against because they don’t have a credit card. It’s a huge injustice if you discriminate because of color, race or religion, and it’s totally unacceptable in our society.

If you don’t have a credit card, you are not allowed to rent a car; you cannot fly in an airplane; and I’m sure there are other issues of this nature that I haven’t discovered yet.

Cash is not an option with these services. Isn’t that unacceptable?

Dear Jonathan: I understand your frustration. It seems unfair that some businesses these days are averse to money. However, I don’t think it’s a civil rights issue.

Credit, like driving a car or owning a home, is a privilege, not a right. The same goes for air travel and car rental. These are not rights guaranteed to us by the laws of the land, but opportunities and privileges.

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In my opinion, companies should have the right to offer their services under the legal terms and conditions of their choice. I’m such a capitalist and fan of free enterprise that I can’t imagine enacting laws forcing businesses to accept cash or forcing banks to extend credit as a matter of civil rights.

Living on money alone is possible, even for your parents. It’s just a little more difficult sometimes.

Take your examples of renting a car or buying a plane ticket. You can’t do either on a whim without a credit card. You need to plan ahead.

I just randomly called five travel agencies. All five will accept cash for plane tickets. And most car rental companies also accept cash. You must be prepared to pay a substantial cash deposit, refundable upon return of the car. Seems fair to me.

I recommend that every family needs a good all-purpose credit card for the reasons you cite, as well as to establish a good credit rating.

For those struggling to qualify, there is the option of a secured credit card. To obtain the card, you must deposit money in a savings account (usually around $300), which is held on deposit to guarantee payment in the event of default by the cardholder.

A secured credit card is a good way to establish credit because after a few years with a good track record, it can be converted into a regular card account. To find a list of companies offering secured credit cards, including terms and conditions, see IndexCreditCards.com.

Dear Mary: When I run out of money, can I pay my credit card bill with a credit card?

Dear Eileen: Technically, yes, you can by taking a cash advance on one card, depositing that money into your bank account, then writing a check to make payment on another card. So yes, unfortunately you can pay your credit card bill with a credit card.

But can you do it? Not if you ask me, what I believe you are. No you can not!

That would be so stupid because even though it might keep you out of hot water for a few precious weeks or months, it will eventually come back to bite you. If you can’t track the first card, what makes you think you’ll be able to manage the balances of two card accounts?

Instead of that crazy idea, you need to freeze your spending, sell assets, find another job, or do whatever else you need to do to keep your payments up to date and that balance paid in full — and I mean ASAP.

Dear Mary: Do I need to sign the back of my credit card? I heard that I could avoid credit card fraud if I didn’t sign it.

Dear Cynthia: Yes, you must sign it. Forget what you heard. This card is not valid until it is signed.

Both Visa and MasterCard require an employee who receives an unsigned card to request photo ID and the customer to sign the card on the spot. Otherwise, the transaction must be refused.

Many people think they can reduce the risk of fraud by writing “Show ID” or “Ask ID” on the back of the card rather than signing it. This does not waive your responsibility to sign the card and does not obligate the clerk to request identification. I hope it helped you!

Mary Hunt writes this column for Creators Syndicate. She is the founder of www.EverydayCheapskate.com, a lifestyle blog and the author of “Debt-Proof Living”. Submit comments or advice or answer questions on its website. She will answer general questions through this column, but letters cannot be answered individually.


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