Ramblings About Credit Cards

http://www.stacymakescents.com/using-cash-instead-of-cards

I read the above blogpost today. I thought it was very insightful, and presented a great case for the argument of using "paper instead of plastic." But here is my (probably NOT as good) argument against that view.



I've heard a lot about using cash instead of credit (or debit) cards lately. I understand that it is much harder to part with cash. I also understand that you CAN'T spend more than you have with cash.

But I've just been wondering; what about rewards programs? I know that the credit card companies set up these programs to get you to spend more... THEY are really the ones making the money on people who can't control their spending.

But if you ARE the type of person who pays off your balance at the end of the month, then is it really a bad thing to have and use a credit card? We used to only use our card for emergencies... we put everything else on debit so it would cut out the middle man. But when I realized I could make a few hundred dollars a year by using the credit card instead, we started doing that. Now we use the credit card almost everywhere (except ALDI, which only takes cash or debit, or St. Vinnies, which only takes cash. I think the fact that two of the places we frequent most are a discount grocery and a thrift store show that we aren't exactly HUGE spenders...), and then just pay it off out of the checking account at the end of the month. Since we started using it more, I realized how fast the points can rack up... just on buying the purchases of daily life.

Now, I'm definitely not saying I am the most frugal person. I'm sure I could benefit from like a Dave Ramsey class or something. I definitely spend money on things I don't need. But I'm just saying that sometimes credit cards seem like a good thing.
Example #1: I have started buying diapers and sometimes other non-perishable groceries online because I find great deals. If I am going to buy disposable diapers anyway, and I have a $10 off coupon online, but then I went to the store to buy them with cash, I feel like I'd be losing that $10. (I know cloth diapering is MORE economical, but that's just not something I want to do since I have shared/pay laundry facilities right now)
Example #2: I have ALWAYS bought my husband's school books from Amazon or Half.com... why on earth would I pay 3x as much for books from the college bookstore? (Now, when I was in school, I didn't even buy books... just used the library. But he likes to build his theological library, and this is still cheaper than LOGOS.)
These are just a couple examples of things I couldn't do if we didn't have a credit card.

When it comes to the credit card rewards, I don't go for any of the gift cards and appliances and other stuff they have on the rewards redemption... I just go for straight cash back to pay the credit card balance (I usually redeem at about $100 or so). Is this really wrong?

I think trying to justify your purchases because of a rewards program or deal is foolish (Sure, I paid $80, but I "saved" $20 on this new coat because it was on sale! But did you NEED the coat? You could have saved the $80 you paid) but I don't think there's anything wrong with using a different method to buy the things you would already be purchasing in order to get a "reward."

I think handling money is more about setting up a system that works best for your family. For us, my husband is actually MORE likely to spend cash than to use a card, because he knows his wife balances the checkbook and sees every McDonalds run he makes. When he gets a bit of cash, on the other hand, I'll ask him for some of it in a week and he will have no idea where it went.

My husband and I run the risk, just like anyone does, of living beyond our means. I suppose this would be a trap that is much easier for us to fall into since we DO use credit cards. (Who knows? Maybe someday I will jump on the "all cash" bandwagon.) But my point here is that I think there also needs to be more education on how to WISELY use a credit card. Whether we like it or not, our kids are going to be using electronic money; instead of teaching them that it is a bottomless pit they should avoid, we need to teach them that it is a tool, and teach them to be smart with it.

Thanks for reading.



*Note: Above, I highlighted in RED the crucial point to making this work. You must pay off your balance on the credit card. If you carry a balance and pay interest, THAT is where it becomes unhealthy debt. My husband and I are not debt free (I think student loans are a "good debt") but we DO strive to be free of credit card debt, and so far have been able to accomplish this. I just wanted to clarify that.*