I Don't Agree with the Dave Ramsey Philosphy, I Use My Credit Cards Responsibly
Okay, so you know I am a fellow Ramsinian. I believe in what Dave teaches and I love his Dave-isms. I also love that I no longer have any credit cards and I feel more financially free than back when I was living my parents and they paid for everything. But, every once in a while, I'll run into someone who doesn't think that credit cards are bad because they use them responsibly. They pay the balance off every month and they get airline miles, cash rebates for vehicles, as well as the cash rebates at the year's end. So what's so bad about that? Well, let's get down to it.
What is responsible? Dictionary.com has several definitions for responsible, one of which is the characterization of good judgement or sound thinking. I feel that the issue begins with income, or the money you have. Good judgement and sound thinking begin there. Why are credit cards needed if you have the money in the first place. You're obviously able to pay off the balance monthly, why not use your own money? At least then there is no possibility of late payments, annual fees for paying off your balances, or a statement being lost in the mail. It hasn't happened to you yet? Well, I suppose it could never happen right?
Now, I posed the question: Why do you use a credit card if you have the money in the first place? I can't get airline miles otherwise. Or cash rebates. Okay, I'll give you that. Those are seemingly nice perks to using plastic. But, now, let's do the math.
General Motors offers a 5% rebate, so let's say you're getting a $4,000 rebate. In order to get that $4,000 rebate, you had to spend $80,000 to buy a vehicle that will lose $3,000 of its' value the minute you drive off the lot. Does that equation present good judgement or sound thinking? Far from it.
Dunn & Bradstreet conducted a study that showed that consumers spend, on average, 12% to 18% more money when using credit cards. Those annual cash rebates come in at a 1% to 5% return. That's pretty dismal and again, not characteristic of good judgement or sound thinking.
While folks think they are taking advantage of the perks these cards offer, there are people like me that don't like to play games where we don't make the rules. These credit card companies know what they are doing. Unfortunately, there are a lot of people who are buying it, hook, line, and sinker. Are you one of them?
What is responsible? Dictionary.com has several definitions for responsible, one of which is the characterization of good judgement or sound thinking. I feel that the issue begins with income, or the money you have. Good judgement and sound thinking begin there. Why are credit cards needed if you have the money in the first place. You're obviously able to pay off the balance monthly, why not use your own money? At least then there is no possibility of late payments, annual fees for paying off your balances, or a statement being lost in the mail. It hasn't happened to you yet? Well, I suppose it could never happen right?
Now, I posed the question: Why do you use a credit card if you have the money in the first place? I can't get airline miles otherwise. Or cash rebates. Okay, I'll give you that. Those are seemingly nice perks to using plastic. But, now, let's do the math.
General Motors offers a 5% rebate, so let's say you're getting a $4,000 rebate. In order to get that $4,000 rebate, you had to spend $80,000 to buy a vehicle that will lose $3,000 of its' value the minute you drive off the lot. Does that equation present good judgement or sound thinking? Far from it.
Dunn & Bradstreet conducted a study that showed that consumers spend, on average, 12% to 18% more money when using credit cards. Those annual cash rebates come in at a 1% to 5% return. That's pretty dismal and again, not characteristic of good judgement or sound thinking.
While folks think they are taking advantage of the perks these cards offer, there are people like me that don't like to play games where we don't make the rules. These credit card companies know what they are doing. Unfortunately, there are a lot of people who are buying it, hook, line, and sinker. Are you one of them?
posted by Emma at 10:32 AM
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