Tuesday, February 11, 2014

Why I Love My Credit Cards

A number of experts recommend that people go all cash to learn how to manage their budget. It seems to work for many, but it doesn’t work for me. Personally, I rarely keep more than $20 cash on me when running around in my daily life. I’ve found that when I have $100 in cash, it just disappears. I save all my receipts and still can’t figure out where all of it went. When I keep $20, it seems to last forever.

So, these are the reasons I love my credit cards:

I can see every single little thing that I’ve spent my money on all in one place. I can easily see if I overspent on one category or another. I’m also reminded of purchases that may have seemed justifiable at the time, but a month later, give me reason to question my logic.

Remember back in the day when people wrote checks at the store and the minute you saw the checkbook come out, you started looking for a new line, because you knew it was going to be a while. Now, that’s how I feel about cash. First the customer has to count it, then the cashier has to count it, then there’s change, or the dreaded “oh wait, let me give you a nickel” scenario. Credit cards are so much faster. No counting required. Swipe. Yes. Sign. Go.

If I lose my credit card, I can cancel it. If something goes wrong with a purchase, I can dispute the charge. If someone else uses it, the credit card company won’t hold me responsible. Some cards even insure the things that I buy with it.

Cash Back. I earn 1-3% cash back on my purchases. And it may not be a lot, but it’s considerably more than 0. I pay my household bills with my credit card for the cash back every month. I even charged the down payment for our car for the cash back.

Plus, some of the sign-up rewards are incredible! My husband and I each signed up for a new credit card the other day because they were offering $200 cash once we spent $500 on the card in the first three months. So we spent $1,000 combined on things that we would’ve purchased no matter what (food, gas, bills, etc…) and they credited us $400 cash. 

It’s always important to remember that ‘they’ (the financial lending institutions) are in the business of making money. They provide these incentives to lure people in and they are betting on the majority to hold a balance so 'they' make money on the exorbitant late fees and interest. Don’t fall for it. If you don’t have the cash to pay it off, don’t use the credit card. 

Speaking of which, that’s the perfect segue into the things I don’t do to make sure my credit cards and I continue to have a healthy relationship:
  • I never keep a balance on a credit card. Ever. I pay every single month’s balance in full and on time. Credit cards are a very slippery slope.
  • I don’t pay annual fees. It’s not worth it.
  • I never spend money that I think/plan/expect I’ll have later. I only spend what I know I have now, can afford, and will have in a month when the bill comes due.
  • I don’t authorize indefinite auto-payments on my credit card. If there is something that has to be an auto-charge, I track it very carefully to ensure there aren’t any glitches in the system…Ahem…over charges, fees, or extra charges.
  • I double check all return credits to ensure that the money is actually being credited back to my account. As we all know, technology isn’t perfect. So, I keep all of my receipts to remind myself when I need to check. It’s my money, it’s my responsibility.

In short, I use credit cards because they save me money and they help me track my spending. 

-Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
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