by Tricia
I still have one card that we use for online purchases and some subscription payments. I have also used it for some larger purchases like tires for our car. This card is to almost always have a zero balance. I charge what I need to charge and then turn around within a few days (after the charge is posted) and pay it right off. I don’t even wait for the statement. I have a rule that if I can’t turn around and pay for something immediately, it doesn’t go on the card. Case closed…no questions asked.
Having that control of our spending was always a problem. We’d purchase something on our credit cards thinking we would have money later to pay it off. Well, the money never came and the balance would sit on the card. We’d charge more, thinking again we could pay it off. Again, we were wrong. Before you know it, you have a nice balance on the card and there’s no way that you could pay off the card in one swoop (less a windfall, of course).
The card that I am using for our purchases has a cash back program and I have to say that I love it! I recently earned $20. Instead of me paying that particular credit card company finance charges, it is paying me for using their card. In my opinion, this is how credit cards are supposed to work!
Be careful, though. Several studies prove that people spend up to 18% more when they use credit cards to pay for things. It doesn’t resonate as much as cash. The credit card industry’s own studies and McDonald’s studies prove this, which is why they made the push to get vending machines and fast food restaurants to take credit. I know it’s easier for me to hand over plastic than to hand over $20 bills.
This doesn’t sound like it applies to you since you use the card for specific, limited purposes. But, hopefully readers won’t fall for “cash back” as a justification for placing all of their purchases on a credit card.
I have a card just like that in my home country (Turkey) too. My personal retirement acoount (we do not have 401ks but personal retirement set-ups with a variety of insurance companies) is set up with the insurance company owned by my credit card bank and they allow me to put the extra cash towards my retirement fund. Isn’t that neat? This way I am not tempted to spend the extra cash towards unnecessary items. Thanks to my bank and it’s Bonus Card.
I always pay everything with my credit card and pay the full amount each month. I never ran a credit card balance the last 15 years.
I’ve been good about keeping one card for emergencies and paying off the balance a.s.a.p. You get a sense of satisfaction in doing this because you don’t feel like your relapsing into old habits plus you are in control of spending. About the cash back, that’s a perk that not a lot of credit cards offer so that’s a nice incentive to have;)
Nice work on being disciplined about the credit card use. I’ve also found some debit cards that give you cash back if you use them as ‘credit’ instead of ‘debit’ but they typically only pay very small, fixed amount per transaction rebates. For those who are trying to avoid using credit cards altogether this may be a decent alternative.
I have a PayPal card that offers me 1% cash back. It takes this a step further and lets me earn cash back on a debit card instead of a credit card. I use this almost exclusively for my purchases and transfer the earnings into a savings account 🙂
Yes, that is the way it should work for us but CC companies would scurry back into their dark little holes if everyone was so smart and disciplined. Anyway, yea to you!