The reward points, the 30 day free loan, and the perks are just excuses to keep that piece of plastic. No matter how much control you have, credit cards are a convenience that you pay for.
I used to think that credit cards are disastrous for the irresponsible but benefit the disciplined. I saw those reward points as free money since we could get free merchandise and even cash back. I was wrong, and have been for more than a decade since I was first approved for these little money suckers.
Some of you may disagree, and I probably would have too if I read the same point being made a couple years back. If this is you, consider the following scenarios before you pull out your card next time.
- The Cash Only Restaurant – Have you seen these around your area? I was at a restaurant the other day that only accepted cash. I didn’t remember until I sat down, and we only had $8 in our wallets. Instead of going to find an ATM machine, we ordered the cheapest dishes on the menu. We were still full, but the owner probably never knew he lost some business.
- How Did Anyone Buy Anything – I wasn’t lucky enough to be around before the invention of credit cards, but how did anyone buy anything expensive? I remember a decade ago when there were stories of Chinese people buying condos in Hong Kong and paying in full with a suitcase of cash (I’m not kidding. Just imagine a suitcase with stacks and stacks of $100 dollar bills inside). Is it a similar situation when people buy any big ticket item before the credit card era? Some people may use checks, but what about those that don’t like the lack of security? Without credit cards, I would always have to carry a big stack of bills if I ever wanted to buy anything. The thought of being robbed would probably deter me away from wanting to buy, and it could be a good thing.
- Even Pay Yourself First Won’t Work – When I receive income, I usually stick them into my savings accounts immediately. Add to the fact that I hate taking money out and I have a nice little savings machine over here. But with credit cards, I never have to withdraw money to make a purchase. Instead, I use the card and pay for it with my future earnings because the bill isn’t due until then. I won’t be saving as much money next month, but hey, who’s counting?
I’m sure there are tons of other scenarios where credit cards have made us spend more. Can you think of any?
Credit Cards are Just Like Any Other Luxuries
I’m not trying to start a war with credit cards. Far from it, since I think credit cards helped consumers much like electric shavers helped men. They are convenient, saves times, but they just cost money.
If you think about it, credit cards are a luxury item much like any other. You pay for a Louis Vuitton hand bag because you love wearing it and the praises that you get from your peers. You pay more to replace your computer because you get more enjoyment and productivity out of a faster and brand new machine, and you spend more with a credit card for the convenience and power that it presents you.
Credit cards cost money, but it doesn’t mean that they are bad. Keep your card, but just make sure you know that you are paying for the privileges one way or another. Even 0% balance transfer credit cards may not make sense.