#5: Buy Yourself an Education
Betsy Collins was an executive assistant at a burgeoning home improvement company. She noticed that she could charge as much as $100,000 for traveling to trade shows without requiring her boss to sign off. After she was arrested and charged with embezzling $1.5 million, she told the court she was saving to send her kid to college.

#4. Buy and Flip a Big-Screen Television
Adrienne Martin allegedly used purchasing cards and a travel credit card from her office at Texas A&M University to treat herself (repeatedly) to a total of $35,000 in consumer goods to sell for cash. Internal investigators traced an LCD television she bought from Best Buy and then traded the same day to a pawn shop. Martin was fired.

#3. Justify Your Revenge or Feed Your Addiction
Like many employees, Georgia resident Marjorie Warren was disgruntled over a 50% pay cut. Marjorie, however, felt this was justification for racking up purchases totaling $100,000 using her company credit card and business checking account. Her shopping spree lasted over three years. The Association of Certified Fraud Examiners reports that some workers like Marjorie commit corporate credit card abuse when they feel disrespected. Warren was found guilty of theft and forgery.

#2 Buy the Fast Car You Deserve
As a CFO of Tommy Hilfiger Handbags, Martin Bodner used company credit cards to buy himself and his brother a pair of Jaguars and, for grungy days, a pair of Audis. His brother never worked there. Company investigators discovered Bodner committed $19 million in credit card fraud and other embezzlement. He got a five-year sentence.

#1: Buy $20 million Worth of Snappy Threads
Koss Headphones Vice President Sue Sachdeva allegedly used Amex cards to buy snazzy apparel for her fund-raising gigs. Federal investigators say there were $20 million in disputed charges, with one clothing purchase totaling $1.35 million.

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The good news was that account terms must now be spelled out clearly from the lender under provisions of the newly enacted Credit CARD Act. Fortunately, unlike some borrowers, I learned a long time ago that you have to pay more than the minimum each month if you hope to break the chains of financial bondage to a lender. The new reporting laws also require my credit card company to tell me that if I paid three times the minimum each month, I could pay off the balance in three years and save myself thousands of dollars in interest charges and fees.

Last spring, President Obama signed the Act, and since then, my wife and I have undergone a massive change in our relationship with credit. At first, my wife’s platinum card ceased working at ATMs and in stores–a startling inconvenience because we had made automated bill payments each month and remained under the credit line. Like thousands of other Americans, we learned the reasons only after the credit card company sent a belated notice that they were discontinuing cards acquired from the original lender.

How the Card ACT Changed Us

Ultimately, the lender didn’t care if it hurt anyone’s feelings (or financial well-being) by suddenly cancelling cards so it can recover anticipated losses from ending suspect lending practices now prohibited by the Act. Consumers everywhere have been left holding the bill at restaurants, gas stations, and other places where they assumed their card transaction would go through.

Now my wife and I have dropped cards we don’t need, and by continuing to carry low balances, paying more than the minimums, and shifting money to a savings account, we’re able to pay down the plastic debt that, if paid on the bank’s schedule, would still be on the books 502 years from now.

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While this makes perfect sense on the surface, where are the data to actually back this up? Debt reduction guru Dave Ramsey claims that people spend 12-18% more with credit cards than with cash, but doesn’t provide any data to back it up. There is also an oft-cited study by Dun & Bradstreet that makes similar claims, though I haven’t been able to locate it. The trouble here is that people citing this study variably claim a 10%, 15%, 12-18%, or even 64% (!!!) difference.

So what’s the truth?

I honestly have no idea. I’ve looked fairly extensively, and I still haven’t been able to find data to back up the various claims. That being said, my personal experience runs counter to the prevailing wisdom that credit cards = higher spending. Sure, if I was out and about without credit cards and didn’t have any cash in my pocket, I wouldn’t be able to spend anything.

But when I do have cash, I tend to be pretty free and easy with it. And if I wasn’t carrying credit cards, I’d be all the more likely to have cash in my pocket. Moreover, with the advent of debit cards, many consumers still don’t get that feeling of cash leaving their hands even if they avoid credit cards.

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