Becoming Debt Free in 2009

February 17, 2009

Credit Cards – Cardholders (#1)

Filed under: Credit Cards,Dave Ramsey,Debt — ambercouric @ 10:19 am

I have thought about this post for some time.  I have come to the conclusion that I will need to have several posts to say all I want to say.  Today, I will discuss the cardholder.  Tomorrow, the card issuer.  Thursday, I will combine the two. 

 The cardholder.  The person who uses the plastic.  We come in various sizes and shapes and our attitudes vary widely on the use of the credit card.  I have only chosen a few types here and many people will see themselves somewhere between these categories.  This in no way represents all cardholders.  These are groups that I see most often written about in the PF blogs.

Cardholder 1 – THE REWARDS ARE MY FRIEND -is the person who can use the card, pay it off each month and collect the rewards.  There are many people in the PF blog world that are able to do this successfully.  These people probably have their financial house in order and understand that credit can be used as a tool.  By the way, these are the people that the credit card companies don’t like.  The companies aren’t making money from them.  These are also the people who are shocked when their card limit is decreased and the interest rates go up.  These are the perfect customers IF you are giving them a mortgage, car loan, or personal loan not  a credit card.

Cardholder 2 – THE MAJOR PURCHASER -is the person uses the card for big purchases and pays off relatively quickly.  Usually a few months maybe up to a year.  This person probably weighs the cost of the interest to be paid over having the item sooner.  This person doesn’t charge the daily expenses or buy just because they have available credit.  My guess is that this person carries only a couple of cards.  The cards aren’t maxed out and more than the minimum payment is usually paid.  This person understands using credit but isn’t as disciplined as cardholder 1.

Cardholder 3 – THE SPENDER – is the person with numerous cards.  Lots are maxed out and have high interest rates.  The spender may at times feel like the banks are out to get him.  The spender likes stuff or uses the credit cards to live.  The spender may use his card for groceries, gas, the day to day expenses. In the early days of the spender’s credit card  use it was probably cool to be able to get whatever he wanted immediately.  Initially, the spender planned to pay early and more than the minimum but month after month as the charges went higher and more cards were added this became a vicious cycle.  This is actually the person the credit card companies like the most.  The person is paying the minimums at a high interest rate.  Once in a while there may even be a late charge or over the limit fee added.

Cardholder 4 – CREDIT CARDS ARE EVIL and is no longer a cardholder- is the person who swears by Dave Ramsey and truly feels that credit cards are the worst thing in the world.  Their card went in the shredder, blender or it was blow torched.  This person can’t imagine why anyone would even consider carrying a credit card.  Most of these people were at one point  a cardholder 3 person but has been disciplined and gotten rid of all of their debt and vow never to be there again.

I am more like cardholder 2 – the major purchaser.  I can tell you pretty close to every transaction ever made on my credit card.  The $8000 I have been paying off since I started this blog was a new refrigerator, washer, dryer and sofa.   Now that I have it paid off I will plan a little better for major purchases.  But I will still use it for online orders and travel. 

What type of cardholder are you?  Can you think of another category that I left out?



  1. I laughed reading your descriptions of the cardholders. I can honestly say that I’ve been in 3 of those categories at some point in my life. When I got my first cc at 18, I was firmly in #3. I bought all sorts of junk, including lots of pizza for my roommates, and paid only the minimums. By the time I graduated college, I was more of a #2. I was only charging big things (like my honeymoon) and paying it off over the course of 6 or 7 months. DH was also a #2. During the first 6 years of our marriage we almost always carried a balance on one of our cards, but it was always for something that we deemed important, like our washer/dryer or new furniture. I am happy to say that for the last 5 years though, we have been firmly entrenched in the #1 category. Our card gets used regularly for planned expenses like gas, and also for our big expenses, but we have learned to save what we need to pay it off before we buy. We really only use it to get the cash back. I have thought about the Ramsey way, but honestly, I feel like I have enough discipline to stay in the always paid off category.

    Comment by Angie — February 17, 2009 @ 11:22 am

  2. I think a category for emergency credit card users would be good. Most of our credit card debt is because of a family medical emergency. It’s the unexpected that often derails the best laid plan. I

    Comment by louise — February 17, 2009 @ 11:49 am

  3. I went from a #1 to a #3 and now I’m working my way back to #1. I may get to #4 some day but we’ll see.

    Comment by Karissa — February 17, 2009 @ 11:50 am

  4. @Louise – I agree. The should be a catagory for emergencies.

    Comment by ambercouric — February 17, 2009 @ 12:03 pm

  5. We have experienced all these types, but we are somewhere between #1 and #2.

    Comment by Sheena — February 17, 2009 @ 12:05 pm

  6. Hi there-I would say I’m number 2. Having a workable budget means a credit card can be used for those bigger purchases when needed. Love the post, very accurate, I’d say!!

    Comment by sharon rose — February 17, 2009 @ 12:13 pm

  7. I am cardholder number 1 – max out the rebates and pay it off each month. debating if I want to put my rebates into my Upromise account – any thoughts?

    Comment by RateNerd — February 17, 2009 @ 12:20 pm

  8. I was a number two who ended up becoming an number three and am now a number one and hope to stay that way! I do plan on using my credit card (with it’s low limit) while on vacation and I do plan on paying it in full when I’m back from vacation. Great post!

    Comment by bouncing back betty — February 17, 2009 @ 12:43 pm

  9. I’m a #1. I love my rewards. Even though I don’t pay interest or credit card fees, the credit card companies still make some money from me because the merchants where I make purchases pay for transactions on their end.

    Comment by Money MInder — February 17, 2009 @ 3:29 pm

  10. I would say that I was “The Poor Planner” type of credit card user. I never wanted to use the credit cards and paid them off many many times in the past. But because my husband is on commission, his pay varies quite a lot from month to month. In the good pay months, I would pay down (or off) the credit cards, then a low commission (or no commission) month would come along – and I would need to use the credit card just to pay for groceries and other necessities. Now I have finally (after 20 years!) become a good planner. I budget 1 to 2 years out, and know how to save money from the big commissions to cover the months with the small commissions. In the past it was always feast or famine. We have finally learned balance! 🙂

    Comment by Jennifer — February 17, 2009 @ 3:52 pm

  11. I have traveled categories as well. I started as a #3, then moved to a #4. I am still firmly in that camp, but I do have a gas card that I use as #1 – it gives rewards and gas discounts and I pay it off religiously each month.

    Comment by Dawn — February 17, 2009 @ 4:36 pm

  12. I’m mostly camp one, though I wasn’t always. I enjoy the rewards and I use it balance cash flow. I keep my savings in online banks, it takes a few days to transfer so I need the delay I get with credit. They still make money off of merchant fees, so we are a net positive to the banks. In fact most people don’t carry a credit card balance (this includes people who don’t use them at all in addition to the responsible users).

    Comment by Miss M — February 17, 2009 @ 10:18 pm

  13. I’m a recovering #3 and am now closer to #1. One of these days, I’m gonna fly first class on my vacation with my cc miles!

    Comment by shtinkykat — February 17, 2009 @ 11:57 pm

  14. I would say that I am somewhere between 2 & 3 — not all maxed out, no late or over the limit fees, totally understand the terms of using credit… I am hoping to be a #1 someday!

    Comment by jpkittie — February 18, 2009 @ 9:12 am

  15. I was a spin-off of type #4 for the longest time. But there were differences. I had never heard of Dave Ramsey at the time. And I had never had any credit card debt. I firmly believed that credit cards would lead to problems. And I was a “cash only” person for years. If I didn’t have the cash to buy it, I wouldn’t buy it. I got a credit card at one point and refused to use it. After 9 years of inactivity, they finally closed the account. I had great credit (mostly thanks to student loans) but refused to use consumer credit.

    I have, just recently, moved into type #1. I use my credit card exactly like I used to use my debit card. And I pay it off every month. I figure I might as well take advantage of the points. I have a very strict budget which I monitor almost constantly so I will always have enough to pay the card off at the end of the month. I am still very biased against credit cards. I have no idea where I developed such a strong anti-credit stance as I was growing up but it stays with me to this day. I hate owing people money for any reason or any length of time.

    Comment by Kevin — March 25, 2009 @ 1:09 pm

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