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Eat Your Credit Card
By Galia Gichon Thursday August 13, 2009| We know we spend less when we just use cash, and yet we continue to use credit cards. A 2001 Massachusetts Institute of Technology study found that subjects asked to bid on a basketball game bid TWICE as high when they used credit cards, versus when they used cash. Not surprising. When we use a credit card, we treat it like Monopoly money; we seem to lose sight of the debt we're carrying, so we figure we can spend more. It’s like being on a diet and cheating with one slice of pizza. You figure, “Well I already messed up my diet today, I might as well have another slice and forget about it until tomorrow...” Next thing you know, you've eaten more than your share of the pizza, definitely more than you should have. If you really want to be more conscious of your spending, use cash. After all, you don’t really want to eat the whole pizza, do you? Read more about it on Boston.com: Your brain on shopping by Carey Goldberg. |
 Today's DailyWorth was provided by our regular contributor Galia Gichon. Galia is an independent financial advisor and educator based in NYC. You can find her at DowntoEarthFinance.com. Galia also provides editorial support to DailyWorth to ensure that our reporting is factually and financially sound. |
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Written by Jinal Shah, August 13, 2009
Written by Christa Avampato, August 14, 2009
I agree with Jinal. Credit cards, when used responsibly, provide so many benefits:
1.) They are a key factor in building credit history and a high credit score, two things that are so necessary for our financial well-being.
2.) They offer great benefits in terms of points and cash back.
3.) Many of them carry insurance benefits for important purchases.
4.) They are a much safer spending mechanism than cash.
My advice is to get a card, never charge more than 20% of the limit, and pay it off in full every month.
1.) They are a key factor in building credit history and a high credit score, two things that are so necessary for our financial well-being.
2.) They offer great benefits in terms of points and cash back.
3.) Many of them carry insurance benefits for important purchases.
4.) They are a much safer spending mechanism than cash.
My advice is to get a card, never charge more than 20% of the limit, and pay it off in full every month.
Written by Mikelann Valterra, August 25, 2009
Being a money coach for over a decade, I just can't miss how problematic credit cards are! People who advocate them and tell people to use them (and say they don't carry a balance and always pay their balance off in full) must realize that they are in a minority of the population. Only 20% of Americans seem able to use credit cards that way-- paying them off in full each month. So it is wonderful if you are in that 20%. Good for you! (And I mean that!) But don't assume that other people can do it just because you can. This is VERY difficult for most people.
Good debate!
Good debate!
Written by Jinal Shah, August 25, 2009
Good to hear that - now lets get the remaining 80% women in the same bracket as us :) Onwards Dailyworth!
That is also a very negative way of approaching your own money - Women should learn how to use credit cards responsibly. The idea isn't to not use credit cards at all, the key is to use it responsibly. I made the mistake of treating it like monopoly money when I was 18 and in college, but you learn fast and in the last six years that I've used my credit card, I've had my points and cashback pay for a vacation every year or put money back in my account.
Today I use my credit card for ALL my expenses and bills and I pay it off at the end of each month. I never pay any interest or late fees because it is all automated. Additionally, I get 2% cash-back on EVERY single dime I spend on the card.
Even my savings account these days don't offer me 2% so why let go of free money?