Getting your Trinity Audio player ready...

Dear Dave,

I know you recommend using cash or debit cards instead of credit cards. But can you explain why my husband and I shouldn’t take advantage of credit card points for travel expenses that are required for work but will be reimbursed by the employer?

— Cathy

Dear Cathy,

So, your employer is so poor they require you to advance them for your travel? You do understand if your employer decides not to pay you one month—for whatever reason—that it’s your credit card and your debt, right? Even if this hasn’t happened yet, you’re exposed to the risk. All for a couple of airline miles that are virtually impossible to use? No, thanks.

I understand this is standard procedure for some companies, but then a big chunk of corporate America has conned its employee base into taking out a loan on their behalf—with a promise of repayment—and the employee taking on all the risk. On top of that, these companies act as if operating this way is no big deal. Well, it is a big deal. And it’s not a good way to run a business or treat your employees.

Cathy, I once counseled a guy who walked into my office with $11,000 on his American Express card that was “supposed” to be reimbursed. Guess what happened? When he went into work earlier that day, he found a padlock on the door. The company he worked for had filed Chapter 11 bankruptcy, and he got nothing. At that point, he had $11,000 on his American Express card, and the credit card company didn’t care one bit about his company going broke. They wanted their money.

When you use a credit card, you spend more than when using a debit card or cash. Tons of research has proven this to be true. Using someone else’s money just doesn’t produce the same friction in your brain as paying for something with your own money. You don’t feel the sting of it leaving your personal account. Do you want to know something else? I’ve never met a single millionaire who pointed to credit cards and airline miles as the reasons for their financial success.

But I do know a lot of broke, middle-class people strutting around, bragging that they gamed the system. They’ll tell you they beat a multi-billion-dollar company, one that spends tens of millions of dollars every year on studying consumer behavior in depth, at their own game. No, they really didn’t. I’m telling you all this, Cathy, because I want you and your husband to protect your number-one wealth-building tool: your income.

Long story short: If you play with snakes, sooner or later you’ll get bitten.

— Dave