Why are some so against credit cards?

[ActYourWage]

If people are going to overspend, they're going to do it with cash, debit or credit.

True, but it is easier to swipe that debit/credit card at McDonalds or buy that pack of gum at the convenience store when you don't have cash. Some call it impulse buying and that is easier to do when you don't have cash. Just put it on the card and worry about your finanical issues later. I fully agree with the 18% statistic.

For example purposes only, say someone goes into McDonalds. They don't have cash, but do have a debit/credit card. All they want is a cheeseburger and drink from the dollar menu. The total is at $2.xx, then the server asks if they would like to add 2 apple pies for only $1. The buyer says, why not and buys the "up-sale". The total increases to $3.xx and they just spent around 45% more on that one purchase.

In regards to the statistic, we are talking averages of how people spend, not the typical SavingAdvice forum member.

[disneysteve]

For example purposes only, say someone goes into McDonalds. They don't have cash, but do have a debit/credit card. All they want is a cheeseburger and drink from the dollar menu. The total is at $2.xx, then the server asks if they would like to add 2 apple pies for only $1. The buyer says, why not

That's exactly what I don't understand. If I walk into McDonald's (not that that would ever happen) just for a cheeseburger, I wouldn't buy an apple pie - cash, credit, debit, check or otherwise. And if I did happen to want an apple pie, I'd buy one regardless of the form of payment.

Of course, that also explains why I wear the same size pants I wore in high school 30 years ago.

[bjl584]

I agree, but I've seen it with cash and credit.

At one of my wife's former jobs, she always used to tell me about her coworkers. They would rush to the bank on their lunch break on pay day to cash their checks so that they could "afford" to go out and buy lunch, which they did every day. They had literally spent all of their money prior to that. They would also frequent the soda and vending machines in the break room and talk about where they went out to eat the night before or which club they went to last weekend.

They didn't understand why my wife, who packed her lunch daily and brought her own soda, never had to run out to cash her check. If fact, she had direct deposit and didn't cash her check at all. Half the time, she didn't even know it was pay day.

If people are going to overspend, they're going to do it with cash, debit or credit.

A few weeks ago a woman came up to the counter and said, "I want a Playstation 3. Ours broke last night." So I unlocked a new one for her from the case. She then said, "My husband was upset cause we didn't have any money to buy a new one. But I told him that we have a credit card. Just give me the card and I will go get a new Playstation." So there she was buying a $300 gaming system with a credit card becasue her and her husband couldn't afford it any other way. She didn't have the cash to do it. She didn't have enough in her checking account to do it. But, with a credit card it was a simple swipe on the card reader. So, while only a single example of people using credit irresponsibly, it does happen. Paying $20 a month for something for the next year or two sounds more appealing to some people than forking over $300 all at once.

BTW, there are plenty of people here at my work that can't wait till payday either. So, yes, I agree that overspending can take many forms.

[feh]

We got $350 back for the 2011 calendar year using our CC, and we didn't pay a cent of interest.

Pretty good deal, IMO.

[disneysteve]

A few weeks ago a woman came up to the counter and said, "I want a Playstation 3. Ours broke last night." So I unlocked a new one for her from the case. She then said, "My husband was upset cause we didn't have any money to buy a new one. But I told him that we have a credit card. Just give me the card and I will go get a new Playstation." So there she was buying a $300 gaming system with a credit card becasue her and her husband couldn't afford it any other way.

I certainly wasn't denying that it happens. It just boggles my mind. I can't comprehend what goes through a person's head that allows them to buy something when they have no money. That is just a huge disconnect in my mind. Do they not understand that the credit card doesn't actually pay for the item? Do they not understand that a bill will come in a few weeks? Maybe it's a genetic defect.

[disneysteve]

Furthermore, to my earlier point, I can't comprehend people spending their last actual paper dollar on something stupid and then literally having no money for food the next day. Did they not realize they were going to have to eat again? Seems like evolution should have eliminated these people by now.

[MonkeyMama]

We got $350 back for the 2011 calendar year using our CC, and we didn't pay a cent of interest.

Pretty good deal, IMO.

I got $4000+ back during the year 2012, credit card rewards. $4125? (Was a record year, for sure, but we usually get back $1000, at least). That was without one fee or one cent of interest.

Anyway, don't knock the rewards! Yes, most people lose on rewards, that is why they are offered. Most people lose on credit cards, period. I just personally don't spend any different whether I am paying cash or with a rewards card. I am going to spend the same amount, regardless, so might as well take advantage.

I don't even bother with the "I wouldn't touch a credit card with a ten foot pole" crowd - they just have no idea, and have been taught to be overly scared. I've got 20 years positive experience with credit cards, so don't really *get* that mindset, but maybe if I had never had a credit card I would feel that way. The less the responsible take advantage, the more rewards for me, so I am okay with it. I haven't tried to sway anyone to use credit cards, but have often defended the fact that I use them for every day purchases. (Most people assume if you whip out the card for a $1 purchase, that you have a problem. The truth is I am earning tons of free money).

[bjl584]

I certainly wasn't denying that it happens. It just boggles my mind. I can't comprehend what goes through a person's head that allows them to buy something when they have no money. That is just a huge disconnect in my mind. Do they not understand that the credit card doesn't actually pay for the item? Do they not understand that a bill will come in a few weeks? Maybe it's a genetic defect.

I should of given her the web address for this place with her receipt.

[Slug]

I got $4000+ back during the year 2012, credit card rewards. $4125? (Was a record year, for sure, but we usually get back $1000, at least). That was without one fee or one cent of interest.

$4125 is an amazing number. I really have no clue what mine is. Perhaps if I didn't use 7 different cards it would easier to track. I know I'm easily over a $1000 though. It really is so simple if you're just disciplined about it.

[EarlyRetirementJoy]

I asked this same question of Dave Ramsey on his talk show one day. My question to the screener, which Dave Ramsey read off and responded to later in his broadcast was "Why, if I am getting 1-3% back on each cc purchase, paying no annual usage fee and paying off my bill each month, would I not want to carry and use a cc?"

His response at the time didn't make sense to me, which was "because people abuse credit cards, period." I later heard him respond to a live caller who asked basically the same thing. The caller kept pressing Dave on why he was so against anyone using a card, explaining how responsibly he used his, until Dave agreed that, yes, there is a small subset of people that can actually control their spending behavior adequately enough to handle a cc.

So I think for those trying to live debt free it's clearly a personal decision based on one's assessment of their own financial self discipline.

On our side, DH and I have a pretty fleshed out budget that we follow, but we still use our cc for everything we possibly can, including our weekly charitable donations (even our church takes credit cards now . . . hope we're not in conflict with the big guy upstairs by getting a rebate on our donation! ) to extract reward points. We earned enough in reward bucks in 2011, to fund the majority of our holiday purchases.

I don't believe our spending behavior would change at all if we stopped using cc and began using debit or cash instead. We would lose our reward points though, which would be a bit painful.

[MonkeyMama]

$4125 is an amazing number. I really have no clue what mine is. Perhaps if I didn't use 7 different cards it would easier to track. I know I'm easily over a $1000 though. It really is so simple if you're just disciplined about it.

To be fair, I am married, so the average was $2000/each. I couldn't do as well single, but frankly I really didn't do much but open a handful of cards that offered $500-$1000 in cash and gift card rewards during 2011. It was EASY!

[MonkeyMama]

His response at the time didn't make sense to me, which was "because people abuse credit cards, period." I later heard him respond to a live caller who asked basically the same thing. The caller kept pressing Dave on why he was so against anyone using a card, explaining how responsibly he used his, until Dave agreed that, yes, there is a small subset of people that can actually control their spending behavior adequately enough to handle a cc.

Yes, Dave has certainly said that credit cards are fine for some people - just not fine for his primary audience.

[disneysteve]

Dave agreed that, yes, there is a small subset of people that can actually control their spending behavior adequately enough to handle a cc.

I'm glad he admitted that on the air. What surprises me a bit about Dave Ramsey is that his whole plan revolves around strict adherence to the budget. So if you are strictly following the budget, it shouldn't matter how you pay. Credit cards only get you into trouble when you aren't following a budget or a spending plan.

[EarlyRetirementJoy]

I'm glad he admitted that on the air. What surprises me a bit about Dave Ramsey is that his whole plan revolves around strict adherence to the budget. So if you are strictly following the budget, it shouldn't matter how you pay. Credit cards only get you into trouble when you aren't following a budget or a spending plan.

I think it goes to Monkey Mamas point, which is that Dave is primarily focused on helping people get out of debt and back onto their feet, many of whom indeed are struggling under a mountain of credit card debt.

[maat55]

I hear this all the time and really question how they arrived at that number.

If I go to the gas station to fill my tank, I'm going to spend the same amount no matter how I pay, cash or credit. If I go out to dinner, my meal will be the same price no matter how I pay, cash or credit. If I pay my auto insurance bill, the premium is the same no matter how I pay, cash or credit. The same goes for my cell phone bill, the cable bill, a hotel stay, a magazine subscription, a continuing education course or a new pair of shoes. It costs what it costs.

Paying by credit, which I do for all of the above and more, in no way affects what I spend. I don't buy anything or spend anything I wasn't already going to buy or spend just because I'm paying with a credit card. I just don't comprehend how others do that.

Typically, if you go into a store with x amount of dollars only, you will not spend more than x, but if you go in with a CC, many will go over their budget due to lack of urgency that comes with having a specific amount of cash.

I'm a tightwad no matter what I use for currency, but I bet my wife is much more likely to over-spend when using a CC.