Using (or not) your credit cards responsibly
I think this article and the people therein missed the point entirely: it’s not about not using your credit cards, but using them responsibly.
The article cites a study which finds consumers are relying on their credit cards less, that they are leaving them at home, not spending through them. The article also talks about a couple trying to pay down their $8,000 debt balance.
The crux of the issue is the $8,000 balance, not the use of credit cards.
No one should be spending money they don’t have. This is a matter of fiscal self-discipline. The balance on a credit card should be paid in full each and every month. No interest accrues when the balance is paid in full. The card simply becomes a replacement for cash.
I use my credit card for everything. It’s an Amex from Costco from which we receive a small percent cashback to be spent at Costco. We buy a lot of stuff at Costco, so I’m happy with this arrangement. But my wife and I make sure to pay off our balance each and every month. We’re simply using the card as a cash equivalent to get the reward. I have a Visa backup for the odd vendor that does not take Amex. I use my cards so often that I very rarely have cash on me. I just don’t need it. It’s been this way for years.
Now, if people have compulsion issues and can’t break the credit habit without leaving the cards at home (I remember Oprah once suggesting freezing your credit card is a cup in your freezer, making you think long and hard about thawing it out to buy something), I’ve got no problem with that. I’d rather have a nation out of debt than to enforce my idea of fiscal self-discipline, but the real solution is to behave responsibly for you and your family.
Agreed! During college, an otherwise knowledgeable friend of mine revealed that he was unaware that you didn’t have to pay any interest on credit card spending if you paid the balance in full every month. I was dumbfounded!
Yeah I couldn’t agree more. I do all my spending on amex blue and pay off my entire balance in full every month by direct debit automatically. This not only allows me to be fully insured and protected against fraud on all purchases but also gives me back around 100-200GBP in moneyback/cashback once every year in September which is deducted from my balance. For places that don’t accept amex I use the john lewis mastercard which gives me store vouchers every three months. Compared to such cards debit cards offer no added value! Use the facilities provided by such companies to your benefit and as long as you pay off in full every month it doesn’t cost you a penny!