What do you think of Dave Ramsey's hate of Credit Cards? (million, rent)
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Let's say you get an average of $50 a month cash back, that means you spent $2500 on your credit card. I guarantee, if instead, you had paid cash you would have that 2% and more, in grocery savings alone, you would have easily spent $50 less at the grocery store over the course of the month. Factor in the rest of the purchases that you would not have bought with the friction of the paying process back in play, then that 2% doesn't really seem like a reward.
If not spending money is the goal, there are even better avenues than cutting up your plastic...
For example, you could really cut down on spending by having a policy of only paying with pennies. For starters, not many retailers will take payment in pennies, and at the ones that do it will take a lot of time just to parcel them out. Imagine how long you'll be in the self-check line at Safeway dropping pennies into the machine (and the number of people waiting in line behind you, swearing).
Let's say you get an average of $50 a month cash back, that means you spent $2500 on your credit card. I guarantee, if instead, you had paid cash you would have that 2% and more, in grocery savings alone, you would have easily spent $50 less at the grocery store over the course of the month. Factor in the rest of the purchases that you would not have bought with the friction of the paying process back in play, then that 2% doesn't really seem like a reward.
Ohh, and you can't speak or free floating money and self-control in the same post, one contradicts the other.
Not true for everyone and every purchase. I generally don't run charges of $2K/month but I do pay on my cc: telephone, cell phone, internet, all insurances and car fuel/repairs. Those alone get me a decent cashback rebate and they're things I would be paying anyway. I also use it for groceries but I spend the same amount I would as if I were writing a check or paying cash. I treat my CC like cash. It just happens to be cash I won't be paying out for 20-30 days. I never charge what I don't have available funds for.
Additionally, my husband travels a lot for work. We're reimbursed by his employer pretty promptly - but we have the advantage of earning 2% on someone else's $$.
Sometimes you don't get the money back. My older friends just got stuck paying $1000.00 on their stolen card. If the charges go through before you call the back it is your loss.(at least that is what their bank told them) Debit cards are horrible.
I've heard of this. Thankfully the one time my account was compromised many years ago the bank refunded me fairly promptly. The production of a new account etc though stuck with me.
For those who say you won't get rich from cash back on credit cards:
If I would have put the $500 I would get from the double cash back VISA CC in a mutual fund that matched the stock market 30 years ago, I would have $71,000.00. (Assuming a similar return the next thirty years a nice amount.)
Add money I save by using a grocery discount card (see my other post) annually, the figure would be well over $100,000.
Let's say you get an average of $50 a month cash back, that means you spent $2500 on your credit card. I guarantee, if instead, you had paid cash you would have that 2% and more, in grocery savings alone, you would have easily spent $50 less at the grocery store over the course of the month. Factor in the rest of the purchases that you would not have bought with the friction of the paying process back in play, then that 2% doesn't really seem like a reward.
Ohh, and you can't speak or free floating money and self-control in the same post, one contradicts the other.
When I'm doing a lot of business travel, I'll have a lot of months where I'm pushing $5K+ through my credit card. In a typical year, I get $1000+ of free money.
On what planet do you get a cash discount at a grocery store? I live on Earth. It's always the same price cash or credit at any grocery store near me.
The grocery stores I use in New England are:
Market Basket - the high volume discount grocer
Stop & Shop
Shaws
Price Chopper
Hannaford
None of them offer a cash discount.
I have a year's gross pay sitting in the bank and a fully funded IRA/401(k) portfolio. I own two homes without mortgages. My car and my boat are paid for. I haven't paid interest on a credit card in decades. I think I have my personal finances under control. Why wouldn't I take advantage of a 30+ day interest free float on my credit card? My credit card billing cycle just closed today. If I buy something today on March 7th, it will auto-pay on May 3. Why wouldn't I take advantage of a 2% discount and 30 to 55 day interest free financing?
I have a Cumberland Farms smartphone application where I get 10 cents off at the pump that hits my checking account the next day. That's the only debit transaction I normally do. I pretty much never pay cash for anything and I've never used the debit card feature of my bank ATM card. I have no interest in trying to unwind my ATM card being cloned. That is a PITA I hope I never have to deal with.
The problem with people such as Dave Ramsey is they throw out simple rules for simple people.
We don't buy anything unless we can pay for it, but what about things such as charging airline tickets? I travel a lot on business on behalf of my clients, and I'm sure not going to be the bank for them.
My wife and I spend about $2000 a month on our Cash Back Credit Card. We use the Fidelity Visa Card which puts two dollars in our Fidelity account for every hundred dollars we spend on the card. So at the end of a typical year we get about $480 to invest in the stock and bond market.
But if you listen to Dave Ramsey he thinks we are wasting our time and should only use cash and a debit card. He says the $480 cash back is a waste of our time and we will spend more because it is so easy to charge and likely pay interest.
I never pay interest and only spend money on things we would pay cash for. But he may have a point with many people who abuse their credit cards.
What are your thoughts? Do you agree with Dave Ramsey about credit cards being evil for most people, even if they pay 2% cash back?
He is against them for people who can't handle credit, abused it, and are now his audience.
I know I don't spend more with my cc because I don't have it TO spend. If I overspend at the grocery store as one poster insists we are all doing I am fubared the next month. I have to keep the spending the same. CCs do not trick me, I pay twice a month, sometimes 3X if I make large purchases. Things I saved for I put on the card for the rewards and then transfer from savings to pay it exactly the same as if I was using a debit card.
I am glad this thread popped us as a reminder of the dangers of debit cards. I carry mine as back-up. I will switch that to another cc and keep the debit card at home.
Having that stolen can be a total nightmare. Much worse than a cc.
I'm more likely to spend compulsively if I use cash.
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