- It can take the bank up to a week to actually run the charge. So, you might think the money is already gone from your account by time you get home, but it’s not. Be aware of this so you don’t overdraft
- You have some protection with a debit card that uses the MC/Visa logo, but not as much with an actual credit card. And besides, even if you get protection (and ultimately get your money back) in the meantime that’s cash gone from your account.
- So I do prefer credit cards for that reason- but remember YOU MUST pay them off in full each month. If you can’t do that, then you are spending beyond your means.
Here's Kaytee's message to Grandpa Terry:
I know you meant your message for those who tend to carry a balance and not for us who pay off in full every month (per your first sentence), but there are advantages to credit cards over cash.
The major one for me-- if I lose a credit card, or somebody takes it, I can cancel it with no financial loss. When cash is gone-- it's gone, and nobody is going to send you new cash to replace it.
A card provides me a statement of what I spent, where. Cash-- when it's gone, it's gone... and sometimes I don't remember for what or where. Yes, I probably SHOULD write such things down, but I don't, and receipts tend to stray.
No ATM/teller lines to deal with.
Can't buy gas at CostCo with cash-- and it's up to 20 cents/gal cheaper there than regular local stations, plus a 3% rebate if the CostCo AmEx is used.
Other purchases made with the AmEx get a 1% rebate-- which is "real" for me, since I do pay off monthly and thus am not paying interest to Am Ex. It's not a whole lot-- less than $100/year, but the check they send can be used "like cash" at Cost Co, and pays for a weekly shopping trip plus enough cash back to go to the Food Court and buy a pizza for dinner (they only take cash in the Food Court...).
Kaytee
The major one for me-- if I lose a credit card, or somebody takes it, I can cancel it with no financial loss. When cash is gone-- it's gone, and nobody is going to send you new cash to replace it.
A card provides me a statement of what I spent, where. Cash-- when it's gone, it's gone... and sometimes I don't remember for what or where. Yes, I probably SHOULD write such things down, but I don't, and receipts tend to stray.
No ATM/teller lines to deal with.
Can't buy gas at CostCo with cash-- and it's up to 20 cents/gal cheaper there than regular local stations, plus a 3% rebate if the CostCo AmEx is used.
Other purchases made with the AmEx get a 1% rebate-- which is "real" for me, since I do pay off monthly and thus am not paying interest to Am Ex. It's not a whole lot-- less than $100/year, but the check they send can be used "like cash" at Cost Co, and pays for a weekly shopping trip plus enough cash back to go to the Food Court and buy a pizza for dinner (they only take cash in the Food Court...).
Kaytee
And his response back:
Hi Kaytee,
You are absolutely right that credit cards can do all of those things and save you a bundle, be more secure than cash and help you track your spending. But, this can only pay off if you don't carry a balance. Many of these benefits can also be accomplished with a debit card with a credit card logo.
With the average credit card balance being carried by consumers of $8,000 with an interest rate of around 15% their average interest per month is $100. There are no rewards programs, rebates or any other benefit that will add up to that much. Some of the folks I work with are paying $200 to $500 per month just in credit card interest.
You have put yourself in a position to reap the rewards of your credit cards through responsible use. Others have to learn this and are paying the price for over using their credit cards.
Thanks for giving me a comparison to put in the newsletter.
All the best,
Terry
