Post Highlights:
- Credit cards are powerful, dangerous tools. If you fail to understand them and use them poorly, they can become an endless source of misery and debt.
- Credit card variable interest rate increases are tied to the prime rate, so as the Fed raises the interest rate, the interest rate on your credit card will rise too.
- If you’re carrying a large balance, consider taking advantage of a 0% introductory rate on a balance transfer to a different card. But make sure to pay it off within the allotted time frame.
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50 years ago, I was putting myself through college working with a tree crew outside of Chicago taking down huge, majestic elm trees. They had been infected with the tiny beetles that caused Dutch Elm Disease. In an effort to stop their spread, the moment beetles were detected in a tree it was removed and burned. Usually, these trees showed no sign of infection.
Not only was a beautiful tree lost, the lumber that could have been harvested was lost as well — unlike the trees killed by the chestnut blight of the early 1900s. While that wiped out virtually all the mature chestnut tress at the time, at least it left behind an appropriately named and beautiful wood: wormy chestnut.
Because we were taking down trees as quickly as the beetles were detected in them, most were still healthy and robust. This meant they were still filled with sap and water, making them far heavier and harder to deal with than a dead tree that had had a chance to dry out. We were also working in an urban setting, which meant taking trees down that were between houses. It wasn’t just a matter of cutting them at the base, jumping back and yelling “Timbre!!”
The essential tool for this job was the chainsaw. Actually, chainsaws of all sizes. The saw you use to cut the stump flush to the ground is a much larger beast than the lightweight versions the climbers used taking down the top of the tree in pieces. For those, they’d tie a rope to the branch and cut it loose. From there the ground-man would slowly lower it to the ground, ideally avoiding the houses near-by.
Ideally, but not always. I remember the time we roped a large, heavy branch, cut it and watched in horror as it swung in a long arc gathering speed until the butt end smashed into the homeowner’s garage door like a medieval battering ram. That metal door folded like so much tissue paper, although with a far louder sound. Luckily, the car usually parked behind it was out.
Once all the pieces of a tree were on the ground, they had to be cut up so we could load them into the dump trucks to be hauled away and burned. This required still another range of different sized saws.
We worked six days a week, ten hours a day but the money, at twenty dollars a day, was great. It was hard, physically exhausting work. By the end of the day it was easy to get careless, sloppy.
I did this work for three seasons and almost all day, every day, I was using a chainsaw to do it. I am the only person I ever met, who did this work for any length of time, who doesn’t have a scar or much worse, from a chainsaw. Part of this is sheer luck. I once had the saw kick back and the spinning chain slapped my thigh. It ripped my jeans to shreds, but I managed to pull it back such that it left only a slight red mark behind. It didn’t even break the skin.
But the other, and I think even more important part, was that I was the only person I knew who never stopped being afraid of them. I never lost my respect for just how dangerous a tool a chainsaw is. How one minor lapse, one time, can lead to a world of hurt. In fact, once school was done and paid for, and I quit that job, I never touched a chainsaw again.
Still, I loved the work and, when taking down and cutting up huge elm trees, chainsaws are hands-down the best tool for the job. You just had to be very careful.
Of course, I didn’t realize just how dangerous a chainsaw was until I’d seen them in action for awhile. Initially, all I could see was how much fun and powerful they were.
When I left college, elm trees and chainsaws behind, I was introduced to another very powerful and dangerous tool: the credit card. While chainsaws today have numerous safety features the raw, elemental versions I used back in the day lacked, credit cards today seem to have become even more dangerous. Or at least more readily available to younger people not fully aware of the danger. Even as they became more useful and came with greater perks.
In my case, I didn’t get my first card until I was out of school and working at my first professional job. I was probably ~24 years old, and like that first chainsaw when I was 18, when I first picked it up I had no understanding of the danger, only of the intoxicating power.
Fortunately, when the first bill arrived, my older and wiser sister happened to be sitting nearby. I tore it open. I had charged $327.96. That seemed right, and unremarkable. But then I noticed, in large print meant to be noticed, I was only required to pay ten dollars.
“Hey sis,” I said, “check this out. I can buy $327.96 worth of stuff and I only have to pay $10!”
It took her awhile to stop laughing at me. Sisters can be cruel. But then she directed me to the small print meant not to be noticed where it said any balance I carried would be charged at an interest rate of 18%. It was like when that chainsaw slapped my thigh and tore up my jeans, a close call. She saved me from loosing a financial leg (and arm!).
As with chainsaws, not everyone is so lucky in their first encounter with credit cards. Sometimes the damage is deep and takes years to recover from. Some never recover at all. Many should do what I did with my chainsaw back in the day: Put it down and walk away.
But for those who never stop being afraid of them and who treat them as the powerful, dangerous tools they are, credit cards can be as effective at enhancing your financial life as chainsaws are in taking down trees.
In my foreword for her book…
I quote Kristy Shen saying:
“If you understand money, life is incredibly easy. If you don’t understand money, life is incredibly hard.”
So, too, with credit cards. If you understand them and use them well, they are a valuable tool that can simplify your life and yield benefits every time you spend money. If you fail to understand them and use them poorly, they can become an endless source of misery and debt. Using them well is not hard. Here’s the core rule:
Pay them off in full every month and never carry a balance.
With that understood, the right cards offer lucrative signup/welcome bonuses, cash rewards, points for flights and hotels, awesome perks, and are great for everyday purchases. This is precisely how we use them ourselves. With guidance from our friends at CardRatings, and noting that the following are affiliate links that will result in this blog earning a commission if you sign up, here are a couple of the best of the best at the moment:
That second card is the one we use ourselves. If you want to see others, or check out what is currently the best choice if you are reading this post at a later date, just hit the tab labeled Credit Cards in the bar at the top of each page here in the blog.
If you are looking to buy a chainsaw, you are on your own.
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By way of full disclosure, Card Ratings is an affiliate partner. If you click on the links and make a purchase jlcollinsnh.com may receive compensation.
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Here’s a compelling read on an important topic…
Navigating Retirement After the Death of a Spouse
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