Over on our listserv, WalletPOP bloggers and editors occasionally -- and by occasionally I mean daily -- get into heated debates about personal finance topics that are way too boring to think about let alone discuss for the vast majority of people with healthy social lives.

Last week, we ended up debating credit cards -- and whether people really need a credit card. Here's my argument against credit cards:

The more I read about it, think about it, and live it, the more convinced I am that people should not have credit cards.

Fact: People who pay with credit cards spend more money. This has been demonstrated by at least half a dozen studies.




Fact: Scientific studies have found that 100% of people who end up with credit card debt problems/rising interest rates have credit cards.

Debit cards have all the same consumer protections/ID theft protections as credit cards, and you CAN use a debit card to book a flight/rent a car, etc.

So why exactly should someone have a credit card? Rewards points? 75% of airline miles go unused and even if they don't, the extra money that you'll spend by having a credit card easily overwhelms the "free" flights you'll get. I'm really convinced that the benefits of having a credit card are so outweighed by the risks that it is like jumping in front of a steamroller to pick up a penny.

Other WalletPOP bloggers disagreed. Lita Epstein replied:

I'm not a big fan of debit cards because I don't like the fact that it takes cash right out of my checking account. If an error is made it can take one or two months to correct that error and if you have bills due, your cash can be tied up in the battle as you try to correct the error. The problem is even bigger if your debit card is used fraudulently and you have to fix several problems. Clearly we're seeing more and more people experience problems with overdraft fees because they're using their debit cards and not tracking their checking balances carefully enough. That's another big problem with the growing use of debit cards. Even a $50 or $100 error in checking calculations can result in multiple overdraft charges in one day if a person charges a lot of little things. While I do support encouraging people to pay off their cards in full every month, I think credit cards offer a degree of safety that debit cards don't.

My response: It's great to encourage people to pay their cards off in full each month. Back to reality: Most people who use credit cards don't pay their balances in full each month and while overdraft fees can be a real bummer, it's a lot easier to get in debt with credit cards than a bank account. If anything, outrageous overdraft fees -- that must be paid off quickly -- provide a powerful incentive not to spend money you don't have in a way that paying 18% annual interest over a couple decades doesn't.

And Lita's response to that: With overdraft fees averaging $35 per overdraft and banks charging five to ten fees in one day before even notifying the account holder they have overspent their checking account, people can be stuck with charges as high as $350 before they even know they've made a mistake. That could make it difficult for them to pay their regular monthly bills, such as rent, out of that checking account.

Other bloggers noted that renting a car with a debit card can be a pain because they place a hold on your funds. But guess what? If you don't have enough money in your account to cover a hold, you probably shouldn't be renting a car! The No Credit Needed Blog has some excellent information on renting a car with a debit card -- something a lot of FICO worshipers insist isn't possible.

Bottom line? As you can see, there's some division among personal finance gurus about whether credit cards are worth having. But here's my advice: If you are concerned about your ability to manage credit responsibly, skip the credit card.