Why credit cards are bad (and good)

So I got this email today from Providian (provider of one of my Visa cards) about a past due payment. I, being as drewish as I am, freaked out a bit and went to check on that account. Sure enough, I had a balance that was due April 14th, that I had never paid. After seeing it, I remember getting the last payment notice. I had gone to the site to make the payment, but their site was down for maintenance, so I just decided to come back later. Of course I forgot, and it never got paid.

This is mainly annoying for two reasons. First, I made it a point of pride to never pay the credit card companies a cent in interest. I have always paid my balances in full, before the due date. To me, a card is a means of increasing my liquidity and simplifying my planning. Since they give me a month lag between purchases and paying for them, I can know ahead of time how much of my paycheck is going to be spent (since it was in the past) and can put the rest towards savings and such. It's a nice system, and has worked wonderfully for years. I only carry $100 in my checking account, for cash emergencies. The rest is in high yield savings at ING Direct at all times.

Well now I have paid a credit card company my first cent. And, since I'm so generous, I paid them 2337 more cents for letting me spend my money through their service. I guess this was bound to happen eventually.

The second annoyance is that this will probably dent my credit score for a bit. Not that I need a better score or anything... it's already in the 90th percentile... but it's just the principle of the thing. I won't be buying a car or house anytime soon, so it doesn't really matter.

Anyway, I think when I get back I'm going to take a couple cards out of my wallet. I have four, and I really don't need them all. I had two to begin with, just in case, but then I got my American Express card, which I prefer to use for the rewards points when I can. Then, before coming to Spain, I got the Chase card because of the no interest offer. I plan to use it to cover this summer when I have no paycheck and am spending money all over Europe. When I get back however, I think I'll just ask Capital One for a higher limit and cancel the others. Keeping track of four accounts is a major time suck, and really I don't need that much credit. I have enough revolving credit at this point to live on it for two years. Obviously that would be stupid, since at the end of two years I'd be paying interest like crazy, but I could do it if needed.

Anyway, I still think cards are a great way to increase liquidity and plan ahead. They are also handy for unexpected expenses. Plus, I have enough points on my Amex card at this point that I'm planning to buy computer parts with them when I get back. So they aren't all bad.