If you’re counting your pennies, should you pay with cash as some financial experts advise? Dear Husband and I don’t, and for good reason. Here are 5 big benefits we enjoy simply because we use credit cards (while on a budget!):
1. No one has to carry cash, not these days. Every store takes credit cards, and places that don’t, like a coin operated car wash or an old vending machine . . . well, we should be washing our cars at home, and we shouldn’t be spending money on bags of chips and candy bars anyway! Not carrying cash means we won’t nickel and dime ourselves out of our budget.
2. Carrying credit cards instead of cash gives us a second benefit. If we get mugged (good heavens, I hope not!), cash would be gone for good, but if a crook used our credit cards, we would not be responsible for the charges.
3. Using credit cards makes it easier to track our spending. I may not remember where that 100 dollars went the second week of last month, but if we put everything on credit cards, I can check our purchases by looking at recent statements. This has helped us identify places where we can adjust our budget. “I didn’t know we were spending THAT much at the gas station!”
4. (This 4th benefit is a fun one!) Credit card companies pay us to use their cards! DH and I both have a Discover card and one other major credit card with no annual fees. All four of our cards pay us cash back bonuses. We redeem the bonuses in December for a treat. We can’t depend on this money for things like overages in the budget or Christmas gifts because it’s not a reliable amount. One year it may be 130 dollars back. The next year just 30 dollars back. But it’s great fun in December in the midst of all that Christmas activity to plan a romantic date or to order a little gadget from our wish list.
5. Finally, using credit cards and paying the balance every month benefits our credit. A good credit score no doubt helped us secure the low interest rate we have on our mortgage. (Now to pay off the mortgage . . . but that’s a whole different blog post!)
HOWEVER, I would certainly not recommend using credit cards if:
1. You have credit card debt. If you don’t pay your balance in full every single month, any new charges you make just means you’ll be paying more interest on top of the debt. Freeze your cards in a block of ice if you need to, but don’t use them.
2. I also wouldn’t recommend using credit cards if you can’t stay on top of due dates to avoid late charges. There is no need to find a great credit card that pays you cash back if you wipe out the cash back benefits by paying late fees!
3. This one is important. I don’t recommend using credit cards if you don’t have the ability to mindfully spend. Consumer spending experts have told us for years that we spend more when we use credit cards instead of cash. (See, for example, this article from back in 2010: https://www.psychologytoday.com/blog/ulterior-motives/201001/spending-and-credit-cards.) DH and I took this concept to heart and learned to intentionally use our credit cards as if they were cash. That way we can enjoy the benefits of using credit cards while on a budget.
Make this day even better. Consider:
• Do you know how much credit card debt you have, what the actual number is? If not, look at your latest statements and figure it out.