Comments on: The Illusion of Credit Card Rewards Programs

By: Ptolemy

Ptolemy — Thu, 22 Dec 2011 14:29:08 +0000

Discover, the card I use [and the stock of whose issuing parent, Discover Financial Services, I recommend you consider for purchase] offers 1% cash bonus on just about everything. I put our Travelers flood Insurance, car maintenance, employer paid seminar travel and attendance, charitable donations…everything I can onto this card. Of course, I carry zero balance; we don’t buy what we cannot afford to purchase for cash.

Of course, cash-back bonus notwithstanding, there is absolutely no future whatever in spending money but a rather splendid one in saving and investing it. Buy stocks, not junk at malls; don’t run up bar room and restaurant tabs. Let others do that while you buy the stocks of the companies that sell them the things they really don’t need but buy anyway. You can get rich doing just what I have told you and you can have the money to live very, very comfortably without worrying. You’ll get to the Royal Hawaiian Hotel, but not on credit and what’s great is that the rest of society will pay the bill. Good Luck.

By: Holly

Holly — Sat, 18 Jul 2009 00:35:11 +0000

I am a late poster as well…I write each cc purchase in my checkbook (I know, still not the same as cash. That way I get to watch my account balance dwindle. The cash back is just a perk.

By: Julie

Julie — Fri, 10 Jul 2009 03:20:29 +0000

I just discovered this website & post and wanted to share my 2cents, albeit late. I believe it is a simple truth that CC users spend more than cash users, on average, if for no other reason than that cash users sometimes refrain from buying simply b/c they don’t happen to have enough cash on them when they want to buy something. Of course there are exceptions, this is a general statement, so take it for what it is. For us CC users, it’d be an interesting experiment for us to leave our cards at home for a month and compare our total spending in that month vs. other months.

But while I DO think that I’m a bigger spender with a CC than with cash only, I don’t think my piddly 1-3% rewards has made me an even bigger one. Having said that, I’m glad that I can use my rewards card to pay for upcoming big expenses, like tuition. I’d have to make these expenditures no matter what and the $1000+ cash back I’ll get will not be insignificant in my budget.

By: Matilda

Matilda — Sat, 16 May 2009 14:37:33 +0000

I’m flummoxed! You spend more money just because you have a credit card???? That’s your problem. I have a “friend” who has had all her credit cards taken away/canceled, and now she’s overdrawing with the debit card, and she’s bouncing checks. It’s her problem, not the credit card’s problem. A tool is a tool is a tool. All these “averages” quotes are just that: averages. That means half the people are, on a descending scale, are actually spending less with a card, while half are on the ascending scale and spending more. So sure, my “friend” shouldn’t ever have anything but cash, and when it’s gone, she should eat stale bread and drink water because nothing else will get it through her head that she has a finite amount of money. I, however, am not that person. If anything, like Ms Ferret, I’m deterred by the thought of seeing my purchases there in black and white on the credit card bill. When I have cash, I think that no one (i.e. my husband) will ever know what I’m spending. The point is, “know thyself.” If you can’t handle credit cards, then don’t. If you can handle them, why not get some cash back, some miles or nights, or whatever? Stop being so intransigent. We are all individuals and, if we know ourselves, we can make individual choices that are right for us.

By: SJ

SJ — Tue, 12 May 2009 23:50:46 +0000

The fundamental question is whether the fact you are spending credit will trick you into purchasing things that you wouldn’t otherwise.

For people who are anal about pennies then I’m pretty sure they aren’t. For someone less anal abt budgeting and future planning; tougher call.

So the questions isn’t if credit makes you spend more but if 1. manner of payment matters 2. how good you are at stickin to a budget.

If paying with cash makes you underspend to the point you are miserable then uhh not good lol. If paying for cash lets you treat cash as 0 value… also bad.

Judge yourself and viola~~~

By: Funny about Money

Funny about Money — Tue, 12 May 2009 16:33:44 +0000

I’m with TMN on this issue. However, I may be weirder than the average kitten about budgeting. For credit card spending (which, since I do not carry money around, includes everything except regularly recurring bills such as utilities), I have a strict budget and do not overreach it. For unexpected expenses that exceed budget, I use savings set aside specifically for the purpose.

In those circumstances, it would be silly not to use a rewards card, since you’re getting something for nothing.

But sometimes that “something” isn’t worth using the card instead of a different method. For example, if you buy a kitchen appliance from a store that offers a 12-month-no-interest deal and you have the cash to pay for the thing, it may be more to your advantage to put the money in a high-return savings account and let it accrue interest for a year than to charge it on your card for the sake of the 1 percent kickback.

Personally, I find I spend less with a credit card than with cash. Cash flows through my fingers like water, and at the end of the day I have no idea where the money went. Credit card receipts and statements allow me to keep close track of what I spend and where, and that is a big first step in keeping a grip on expenditures.

By: TStrump

TStrump — Sat, 09 May 2009 23:06:53 +0000

I have a cash back credit card and while I do like using it and getting my rebate back each year, it is true that I would probably spend less without it.
It’s just too easy to spend when I carry it around.
At the end of the day, the rebate I receive is probably negated by the extra spending I do. I think credit card companies know and love this fact.