Posted on 06/07/2005 1:45:09 PM PDT by blueberry12
"I became credit card free two years ago, and have one for emergencies only."
I can't really recall, the last time I used a personal credit card. I still have one (just one), zero balance. What really got me "weaned" was the ability to use a debit card instead. I've never felt comfortable with too much cash on me, which led to using the credit card, and next thing you know it's rolled over and you're incurring interest charges, which snowballs, particularly around the holidays. I finally broke the cycle about six years ago, and, like you, I've never looked back.
I'm 27, my wife and I have been credit card free for 3 years. We are definitely the "weirdos" of our peer group. It's been wonderful for our marriage and our finances to actually be in control of our spending.
The economy is not beginning to cool. What we have is a sustainable rate of growth.
"I'm 27, my wife and I have been credit card free for 3 years."
Wish I'd gotten a clue as early as you. It took me until my mid-thirties to figure it out. I'd be way ahead of where I am now, if I had. Now, if only the "good debt" (mortgage) were paid off, I could probably pull off a semi-retirement, that is if I didn't get bored, LOL.
She reminds me that the only reason I'm still alive is that I'm not worth enough yet to make it worthwile to kill me.
Spend that "Cash" ASAP. You are killing our economy by keeping it!
I'm operating under the silly notion thought that capitalism presumes capital, not credit : )
I do love their commercials though. LOL
Mrs. TXBSAFH and I pay off our cards every month.
$0 debt as of today. Yeehaw!
Monday, October 18, 2004How Credit Cards Encourage You To Overspend
The more people charge to their credit cards, the greater the profits made by the credit card companies. The credit card company receives a percentage of each transaction as a merchant fee. But the big money comes from the credit card users: the more you spend using your credit cards the higher the probability you will borrow money from the credit card company at steep interest rates, get hit with fees for exceeding your credit limit, and incur larger penalties for late payments. So credit card companies have a strong incentive to encourage their customers to spend more money using credit cards. They succeed. A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.
That's great for the credit card companies, but often lousy for the financial well-being of the credit card user. Credit cards can make it harder to budget, harder to save for college and retirement, and can get you into debt. To avoid overspending, it helps to understand how credit card companies encourage you to spend. Here's how:
The psychology of credit cards themselves makes it easy for you to spend more money than you should. If you're going to use credit cards wisely and profitably, this is crucial to understand.
When you charge something to a plastic credit card, it doesn't feel as though you're really spending money. Why not? Because when you spend cash, you tend to withdaw an amount from your checking account to cover multiple purchases over a certain time period - say a few days or a week. That gives you an informal budget: "Here's how much I withdrew, and it should last me X days". When you spend that cash, you're aware that you are using up that informal budget. If you use the cash faster than you had planned, you're immediately aware that you might be overspending. In other words, using cash reminds you that you have a budget (even if its informal), and gives you a sense of whether you are within your budget.
That's not true of credit cards. When you charge a purchase to a credit card, there's nothing to remind you at the point of purchase how much you have previously charged to the card or how much money you have spent recently. As a result, it's much harder to stick to a budget if you use credit cards, and it's easy to overspend.
Next, impulse purchases are also much easier with credit cards. It's far easier to make a large impulse purchase if you don't have to find an ATM machine to withdraw cash from your checking account.
Credit card companies also encourage you to buy more by offering rewards for increased spending. Rewards are often tiered depending on how much you charge to your credit card. Credit card companies sometimes give their customers special rewards for using their credit cards during peak spending periods such as the holidays, or using their credit cards with particular merchants.
Finally, credit card companies make it easy to spend more than you should by making it easy to borrow money.
As my grandmother used to say, he who pays his debts enriches himself. Congratulations, jimbo123!
The economy is not beginning to cool. What we have is a sustainable rate of growth.
My short answers just confused and misled-- never good enough. Increasing debt (credit card and otherwise) is a sign of economic well being. After 9/11 we came up rapidly out of a slow time and now we're settling in for the long haul --unemployment and interest rates are just not going much lower than they are right now. So now it's time for the smart money to guess that rates have no where to go but up and money gets tighter.
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