So many experts warn us in hopes of preventing us from using CCs - and with good reason. Many of us mere mortals abuse CCs and end up in debt. But, if you can use the CC responsibly, you are actually much better off paying for stuff with a CC instead of a debit card, cash or check...who uses checks these days anyway?
Only 1 out of 6, PIF and use CC's where cashback/points count
Few perks of using CCs responsibily -
SUB: Welcome bonus of sorts worth anywhere between $50 and $300, and even more sometimes when you start looking at fun stuff like points and miles. The trick here is to find a CC that fits your spending patterns or lifestyle. And you wouldnt have gotten it had you used your debit card, cash or check.
Yes you get a one time windfall of money and take a hit with AAoA, inquiries, and many times have another CC to manage that has little or no value after the 1st year. Many also take a hit buy either spending to meet the sub on items they did not really need, or diverting rewards from other cards to make the threshold. (Spend more than needed and also lessen other rewards)
Cash Back: Ranging from 1% - 3%. Think of it as a refund...which is mostly tax-free (caveat here, if you wind up getting a huge cash back in the course of a year...and you will have to pay taxes) But hey! The net cash back is free anyway, and you wouldnt have gotten it had you used your debit card, cash or check.
Many places give a cash discount of more than 3% if you ask.
If you spend more than if you used cash you lose
Miles: Frequent-flyer miles can be racked up by spending every-single-dollar. You can always redeem it for a free flight ticket, and you wouldnt have gotten it had you used your debit card, cash or check.
The question is would you have saved more by competitive shopping and not a need to fly with a certain airline or stay in a certain hotel chain?
Safety: Paying with a CC makes it easier to avoid personal losses from fraud. If and when your CC is used fraudulently, you are not at a loss, you simply notify your CC company of the fraud and don't pay for the transactions you did not make while the CC company resolves the matter. You can also stop or dispute a payment almost instantly, this keeps vendors and service providers honest.
You can also setup dummy CC numbers to ensure that your CC number does not wind up in the dark net somehow.
The Fair Credit Billing Act lets you withhold payment on things that are damaged or are of poor quality.
One can set up additional saftey layers using debit cards, however this is a real advantage to CC's
Grace Period: When you pay with debit card, cash or check, your money is gone right away. WHen you pay with a CC, you money remains in your checking account until you PIF. (PIF is the responsible CC users MO)
When it is gone right away it is easy to see your budget and tends to lower your spending as compared to flying blind.
You also can't get upside down.
Insurance: Travel, car rental, extended product warranties, lost baggage, etc. Nada for paying with debit card, cash or check.
Better Exchange Rates: When travelling abroad. And some CCs have no foreign transaction fees.
Expense Tracking: CCs give you a way to track expenses. Receipts can easily get lost, so its nice to have online statements as a backup.
Having charges across a dozen or more cards is not better than paying all bills from 1 debit card and billpay service
Tracking, records, statements all in one place
Last and most important: Helps build your credit profile: The best way to build up your credit history, without paying high interest charges, taking out expensive loans, or spending money you weren't planning to anyway, is to open a new CC and use it responsibly.
Having a healthy credit profile is very important for everything from opening a new credit card to renting an apartment or even for opening a new cell phone or internet plan. This does not mean you need to take on debt or pay interest fees, as long as you spend within your means and PIF each month, you will never pay interest, and you will never carry any debt.
Yes if you are the 1 in 6 or else you are paying interest to the CC issuers, and would be better off with a debit /cash.
Playing the devil's advocate !
Kind of fun
Playing the devil's advocate !
Kind of fun
Based on kforce playing devil's advocate, a not beating the dead horse even further...OP I think you have valuable tools to talk to your wife.
Glad we could help!
Here is what changed my wife's stance on CC's. She had gotten a Disney Card because it is cute, and never used it.
We were planning on going to Disney for our honeymoon, so I showed her how many "disney dollars", she could get just by shifting needed expenses over.
So she started sportatically using the card. Suddenly she gets a $50 statement credit from her sign up bonus. She asked me what it was, because she didn't understand why there would be a credit on her account. This finally made her realize that not using cards was leaving money on the table.
Still doesn't use her cards as often as she should, doesn't use the best card for the best purpose, and she sometimes overspends as she is new to credit, but it is a move forward.
I Like the idea Adkins suggested with taking the bank statement and mutliplying it by 2%
I would not phrase it as extra income earned but rather money that rightfully could be in your pocket gone.
People percieve getting extra money/income differently then being shown that they are losing more money as a result.
You take that one statement then, multiply it by 12. Multiply it by 10.
That number is how much she's throwing away over 10 years.
You take that number and show what could've been. An extra really nice vacation, monetary support for a loved one, a (small piece of a) college fund, a nice watch or material item.
Losing hurts, that's how change gets made.
Some food for thought :
If you have a Lowes CC (5%) and need 3 garden hoses, you drive to Lowes.
If you are going to pay in cash, you check the prices at HD, Tractor Supply, Amazon, and Green Thumb.
Is the 5% cash back better than the 8% extra you just paid for the 3 hoses.
Or did you buy 4 because you get 5% back and were there?
If we all really spent NO , repeat NO extra money CC's would be a no brainier.
My bet is almost all of us spend more by using CC's than if we did not have them.
I see my 100+ cashback per month but most likely spent more than if I had been forced to use cash.
This is the real danger in using credit cards even if religiously PIF every month. I myself have been guilty of this on a few occasions but I've since adopted the mantra "you earn 100% cash back on money you don't spend" and it really helps.
I opened my Fidelity card about 10 days ago so that I can get a constant 2% back without having to think about what card I am using and have the money invest away. Basically, a free 2% invested every single year. Maybe something like that would be of more influence for her.
My DW has a Target Visa card. The discounts she gets at Target using the card are great. The local Super Target is closeby and has the best prices around on most items she purchases even before adding in the card discount. Make sure you use cartwheel
I do not have a Target card and receive criticism about lost savings every time I shop at Target. Makes me consider shopping elsewhere just to avoid the conversation. Sometimes I forget to mention going to Target
I kinda used to struggle with this but in a different way. My wife couldn't care less about cards, but she's not opposed to them. Problem is, she uses the first card that comes out of her purse, and it kinda drive me nuts. You know, like getting 1% on gas instead of 5% because she doesn't care, lol.
I've had to show her the difference a gazillion times with rewards charts and all that. She still didn't care because it was hard to remember which card to use.
I wrote "gas" on a piece of paper and taped it to the card. Did the same for "dining" and "anything else." Now she only has 3 cards to deal with and a BIG note stuck to each one of them. Problem almost solved
In fairness to her I would never have a bunch of cards and use one for each type of spend. That seems like a real pain.