I don’t have a credit card … period. If I can’t pay for it, either I don’t need it or I’ll wait 'til I can pay for it.
Excellent policy. However you should consider a credit card for security reasons, especially if you buy anything online. In the event of a data breach, hackers could get access to your bank account. In that event, the bank may or may not make you whole and at a minimum there will be a period of time when you don’t have access to your money. A version of that happened to my MIL. Her account got hacked and the hackers made a number of small withdrawals over a period of time and she didn’t catch it for a couple months. The bank just told her “sorry.”
In contrast, your limits of liability with a credit card are $50 by law and most card agreements provide total protection.
Good luck trying to rent a car.
Or buy an airline ticket.
Or pretty much buy anything online.
I don’t have a credit card … period. If I can’t pay for it, either I don’t need it or I’ll wait 'til I can pay for it.
Do you pay your electric bill before you use the electricity?
No, you use the electricity, run up a balance, and then they send you a bill at the end of the month.
“Hey, you owe us $XXX. Pay up.”
Same with the RESPONSIBLE use of a credit card.
You buy stuff for a month, then they send you a bill.
You pay it.
The End.
When/if you sign up for a card with a 0% extended payment period, same thing. Keep your money in the bank earning (some) interest, then pay the entire bill at the end of the extended period.
The key is RESPONSIBLE use of a credit card. Don’t build up a balance.
I don’t have the patience or attention span to churn for SUBs but I do have a handful of CCs for different reasons.
One AMEX CC gives several types of airport lounge access, gold status at a couple of hotel chains (not amazing but a few perks), various credits (Uber, Saks, etc.) through the year. Another gives a 6% cash back on groceries. A Citi CC went to bat for us when a contractor took our $15K deposit and bailed on us, then went bankrupt. We got all our money back with very little angst or effort. We’ve traveled a lot on accrued miles, although AA’s recent shenanigans moving to points instead of miles makes me wonder if that’s going to be a thing of the past. And the free checked bags, etc. for having an airline card come in handy.
I don’t see much mention of record-keeping but I do like going to a site and looking at our spending trends or verifying a purchase.
I keep seeing people saying on FB that CCs “make you spend 15% more than if you paid cash” and just have to wonder. I mean, I guess some people do that, but if my power bill is $100, paying for it with a CC won’t make me pay $115.
You mention Chase points–I’m still trying to work out the best way to use those. They did a nice SUB but when travel went poof in the pandemic I got out of practice tracking down points deals. I need to work on that.
We were fortunate enough to grab a Barclay Arrival+ CC back when they were still offered 2 points per $1 and the point balance could be applied to any travel expense charged on the card, with 5% rebate on points spent. That’s one I’ll probably hang on to.
Nothing out there really makes me want to apply for a new card right now. Maybe when travel picks up again or a really great SUB comes along that looks useable.
I keep seeing people saying on FB that CCs “make you spend 15% more than if you paid cash” and just have to wonder. I mean, I guess some people do that, but if my power bill is $100, paying for it with a CC won’t make me pay $115.
There have been studies that show that people using credit cards to make purchases tend to spend more than if they had used cash, although there is still lots of disagreement as to who exhibits these behaviors, and why they do so. Here’s a recent study that looks at this: https://www.nature.com/articles/s41598-021-83488-3#Sec5 That said, to say that everyone WILL spend 15% more when they are using a credit card is a misinterpretation of those studies.
I keep seeing people saying on FB that CCs “make you spend 15% more than if you paid cash” and just have to wonder. I mean, I guess some people do that, but if my power bill is $100, paying for it with a CC won’t make me pay $115.
This comes up from time to time, and although I am sure there are people who spend more with a credit card because it doesn’t feel like real money, there are also folks like me who generally use a credit card for everything - unless the expense is really small like under $10. So if you use that as an example, then yes, I spend more when I use a credit card because I have a threshold under which I prefer to use cash, and over which I prefer to use a credit card. But note that I was already spending that money, so the amount that I’m spending is what drives my choice of payment.
If I’m buying milk at the corner store, then I’m more likely to pay the $2 in cash. If I’m buying milk and groceries at the grocery store, then I’m more likely to put that on my credit card and I’m probably buying the weekly groceries, so I’m spending $75 to $100.
But it’s not the use of the credit card that is leading me to spend more money. It’s the fact that I have spent over a certain amount that leads me to use the credit card. The logic is actually opposite for me, and I’m sure others like me.
But it’s not the use of the credit card that is leading me to spend more money. It’s the fact that I have spent over a certain amount that leads me to use the credit card. The logic is actually opposite for me, and I’m sure others like me.
For me, I use credit cards for pretty much everything and in the past two years, places seem to prefer it. When I was in Iceland in Nov, it was all cards for everything I did - I never got any local money.
My Discover card is from their market test so I am a member from 1987. I always prefer cards because the statement shows me what I spent. It made tracking spending much easier for me. Pretty much all my banking is online(I love being able to photo deposit the few checks I get).
My kids had cards from my accounts from first job or getting a license. This saved me money. They could make purchases I authorized so again, I had a record. I also wasn’t losing out on change from cash handed out. I never had an issue with any of them(3). It worked for me. It also covered them for emergencies.
As I posted earlier, I have a couple of Plans on AMEX cards - essentially 0% with no fee paid over 24 months with the ability to continue to use the card with no interest on new purchases paid monthly.
If I want to talk about the good old days, there were a few times that I could pay college bills with a CC and no fee.
My kids had cards from my accounts from first job or getting a license. This saved me money. They could make purchases I authorized so again, I had a record. I also wasn’t losing out on change from cash handed out. I never had an issue with any of them(3). It worked for me. It also covered them for emergencies.
And it was because of your mention of this that I did the same thing with my kids pretty much for the same reasons. I actually co-signed credit cards for each of them when they were 17 because that was the earliest the bank would allow them to have cards. Like you, I also had them keep those cards, and they are 30 now. DD still lives with us, and so I can have her stop at the grocery store for me and put it on that card which I then go in and pay. DS does not live with us, and I do things like tell him to take himself and a friend to dinner on us, and put it on the card which I then pay. This also gave them an established credit rating from a very young age.
If I want to talk about the good old days, there were a few times that I could pay college bills with a CC and no fee.
And again, I am thankful to you for having done that and posted about it. As it turned out, I was able to put DS’s college tuition on my credit card with no fee and get the cash back, so I did. With DD, I would have had to pay a fee that was greater than the cash back, so I just wrote a check.
DH and I have a joint credit card that is solely used for his business. He charges everything on that card no matter how large or small. It helps immensely at tax time when I just run a Quicken report and can put the expenses on the proper line of the 1040.
These are bigger examples of why using a credit card can have some excellent advantages. I think folks sometimes have a knee-jerk reaction where they think using a card means you cannot afford to pay it in full when the bill comes in. For a lot of us, that is a bad assumption.
I do either use cash or write a check at my local quilt shop because they get hammered by the credit card fees, and I would really like them to stay in business. For things like that, I do not use a card.
I also made my kids authorized users on my own accounts when they were very little. Then got them their own credit cards as soon as they were old enough. I actually think this taught them how to use credit cards (for stuff you’d buy anyway, paying off the card every month) and saved them from any young-adult temptation to use cards dangerously. Both had over 800 credit scores at age 18 and handle money well 10-15 years later.
Absolutely. This is America and you can’t even rent an apartment without a credit score. You can’t get a score without using credit.
Both of my kids had secured credit cards (put x dollars in an account and get a card for that amount) by 19. Used for gas, groceries, books, paid off in full monthly. Credit scores in the high 700s by graduation. Son didn’t need a co-signer for an apartment or a different car. Instantly qualified for a real card with cash back perks and he can print his own money with. Paid off monthly.
Absolutely. This is America and you can’t even rent an apartment without a credit score. You can’t get a score without using credit.
In college we gave the kids one of our credit cards with them as an authorized user for emergency purposes. This gave them a credit history of longer than they had been alive. Their credit score is amazing, even with never having been in debt.
To be fair, the screeds against credit cards are because some people totally misuse them and run up a large debt. Like alcoholics, these people need to go cold turkey and stay totally away.
Problem about these screeds here is that nobody here really has that problem. People like us use credit cards as a tool. Get the benefits and avoid the costs of carrying a balance. So the ranting about the evils of credit cards is inappropriate here. It’s like going to a meeting of the Women’s Temperance Society and lecturing them to stop drinking.
The annual statements are starting to come in. All the CC companies are congratulating me on the $XXX of cashback & bonuses we’ve earner from them this year. SMH. You have to wonder where this money comes from, because they sure aren’t getting it from me.
"Both of my kids had secured credit cards (put x dollars in an account and get a card for that amount) by 19. Used for gas, groceries, books, paid off in full monthly. Credit scores in the high 700s by graduation. Son didn’t need a co-signer for an apartment or a different car. Instantly qualified for a real card with cash back perks and he can print his own money with. Paid off monthly.
Why would you say no to free money?"
I haven’t read all of the posts in this thread, but I think a fair amount of people
subscribe to the Dave Ramsey “credit is evil” propaganda. Ramsey has parlayed his very
simple debt reduction/elimination advice into probably hundreds of millions of $'s.
People can read his “Total Money Makeover” for free by checking it out from the local
library, and get some very, very basic financial advice. I read it years ago, and
determined it wasn’t anything my Mom hadn’t drilled into me when I was young. Took a few
years for the drilling to seep into my brain, but not all that long.
Credit cards are valid tools, but if someone has zero impulse control, then I guess they
should try to pay cash for everything. For the vast majority of the rest of us, might
as well take the credit card companies up on their free money offers.
It makes sense that people spend less if they don’t have cards. When I was in college, I never applied for a card. 1poormom finally insisted that I get a card on her account “for emergencies”. I figured that if I was paying cash, then I had to produce the cash to get the item. No risk of buying something more than I can afford. I used to have to go by my S&L to withdraw cash if I wanted to make a larger purchase.
If I’m carrying $20 in cash with me, there is only so much I can buy. I grew up poor, so I was not a big spender anyway. I have cards now because there is no danger of me not being able to cover what I charge. I use the Costco VISA (gives points), and a USAA card (also gives points). The USAA paid for almost all my flights a couple of years ago during our Hawaii trip.
I don’t like signing-up and canceling serially. It’s just more I have to keep track of. Not worth it to me.
I don’t like cash today. I carry very little, except when traveling, and avoid it at every opportunity. I would prefer a cashless society.
If I’m carrying $20 in cash with me, there is only so much I can buy. I grew up poor, so I was not a big spender anyway. I have cards now because there is no danger of me not being able to cover what I charge.
Youngest prefers to use debit cards. He still gets all sorts of points for use, (towards what I am not sure,) and it eliminates the need to pay a bill later. Personally, I am a user of credit cards and pay for it when the bill comes person, but there is little need for credit cards these days if you have the money in the bank. Since his credit is excellent from our having given him a card as an authorized user on our oldest account, it’s not worth debating over.
Unless it has changed since I last looked, the one benefit that is lacking in debit cards that credit cards have is the ability to contest a charge if what you get was not what you were told you would get. Venmo is now providing that as well if desired, for a fee that is charged to the receiver, rather than the issuer. In many ways, credit cards are very old school. I only started using Venmo this year and confess I love it. Our tenants pay their rent this way with almost instant transfer to my bank, (while the apartments.com app I used took 7-9 days to transfer,) and it makes it easier to transfer funds between Youngest and I. Cash App is supposed to be another good one, according to Eldest who is not a fan of Pay Pal.
Another old school way of transferring funds that typically isn’t used by the younger generations are checks. When Youngest had to pay us a dollar amount that was above the Venmo limits, he went to the bank and got three blank checks for a buck. Things are changing.
FWIW,
IP
who might write 5 checks a year now, though would have easily done that in a month a decade ago
I very rarely use checks now. The landscaper is all I can think of at the moment. Everything else is credit card, or occasionally credit union debit (not the card, a direct debit by a utility, for example). I write maybe a dozen checks per year, now. Bought a box of checks maybe 10 years ago, and still haven’t used it up. Like you say, old school. And checks have issues (e.g. forgery, bouncing, etc).
Daughter has used zee-something, I believe. She borrowed money from her mom, and paid it back that way. I gather it is similar to VenMo.
I very rarely use checks now. The landscaper is all I can think of at the moment. Everything else is credit card, or occasionally credit union debit (not the card, a direct debit by a utility, for example). I write maybe a dozen checks per year, now.
I still use checks for specific things. For example, the local quilt shop requests cash or checks because they hit by large fees for credit card use. To incent folks to use cash or check, they give you a raffle entry with each purchase using those from which they draw a name monthly for a $25 gift certificate to their store. It’s more cost effective for them to do that than pay the credit card fees. I want them to stay in business, so I write a check when I go there.
I also have POA on DS’s bank accounts, and from time to time, he needs me to move money from the credit union to his bank account. Although I can do that electronically, the bank takes 3 business days to credit his account so it is actually faster for me to write a check and use the mobile deposit on my phone to get the money in the account the next day. I really, really want him to get rid of that bank and make the credit union his primary financial institution, but for whatever reason, he likes it as it is.
I find that checks do still have their place, and like credit cards, are just another tool in the financial toolbox.
I have seen some places starting to charge an extra 4% (give or take) for use of credit cards. Usually smaller shops/businesses. They seem to prefer cash. (And they don’t even sell buggy whips!
All the CC companies are congratulating me on the $XXX of cashback & bonuses we’ve earner from them this year. SMH. You have to wonder where this money comes from, because they sure aren’t getting it from me.
Radio host Dave Ramsey has built a $100 million plus empire railing against credit cards. He’s very popular among folks who want a “work requirement” for the child tax credit. I thought child labor was illegal.
Radio host Dave Ramsey has built a $100 million plus empire railing against credit cards.
I’m not a fan of DR because I don’t think his investment advice is good. But for a large proportion of the population, getting rid of credit cards and debt is super excellent advice. To be among the minority of Americans who accumulate wealth to, say, generate at 4% SWR at age 65, you have to start somewhere. His religious zeal against debt is exactly what many need to start. Debt abuse is similar to substance abuse. For many, not doing any of it is the only way they don’t get addicted.
As an aside regarding his religious zeal, I don’t like that he mixes religion with personal finance and think a low-cost index fund approach to investing would serve his audience better. But I guess the religious zeal for the “no debt” portion has done a lot of good for a lot of people.
