Who’s to Blame for Your Spending? You or You?

Credit Card Photo by Petr Kratochvil

Bible Money Matters wrote yesterday on how credit card companies act like they’re your friends when they really just want your money. This is true, of course, but frankly it neither surprises nor bothers me. Credit card companies and banks are businesses – just like your health insurance carrier, supermarket and baby sitter.

The Business of Business

No one starts a business for the purpose of making friends. “Making friends” by providing cheerful service and offering “helpful” advice  is merely a means to an end. When a business advertisement says “Your satisfaction is our #1 priority,” the word “satisfaction” is really a metaphor and euphemism for “money.” Otherwise the business’s existence would be pointless.

So when a credit card company offers you “advice” to put all your purchases on your card to maximize your cash back or rewards earnings, they are in fact helping themselves. We all know that. There is nothing you can do about what they say to try to get you to wrack up a large debt. But just because they hope you’ll do it doesn’t mean that you have to.

Everything you have done and continue to do with regard to your credit card has been, and continues to be, 100% up to you.

  • Can the credit card company strong-arm you into swiping your card at every store you see or enter?
  • Can the credit card company force you to spend beyond your means?
  • Can the credit card company make you not pay your balance in full every month?

A Grain of Salt and a Pinch of Brain

Just remember that any “advice” coming from someone whose goal is to make money from you should be taken with a grain of salt. Example —

Car salesman: That car looks great on you.

But neither do you need to be bitter about their attempt to sway you into debt. Laugh it off. Congratulate yourself on your ability to see through their ruse. Then take that grain of salt, add a pinch of noggin and think about how you can benefit from what they do offer.

(Talking points from Money Matters’ post in green with my added 2 cents in normal color.)

  1. Use Your Card Wherever You Go
    Only on the things you need — groceries, gas and necessities.
  2. Make Chase Rewards Plus Your Favorite Place To Shop
    Treat it as you would the mall. Only go there if you need something in particular. If their prices are competitive and you get 10% cash back, you just might save money. But remember to comparison shop.
  3. Pay Bills Using Your Card
    This is something I actually do whenever I can. Automatic payments charged to the card means I can keep money in my savings longer, then transfer the total amount to checking when it’s time for the credit card payment. We received $75 in Amazon Gift Certificates last month thanks to the 10x points promotion on bills.
  4. Add An Authorized User… At No Extra Cost!
    Madoline and I have been sharing credit card accounts for 5 years now because we share all our money. Together, we were able to earn over $500 in cash back on our on our AMEX Blue Cash Credit Card in the last 2 years, something we couldn’t have done with separate accounts because of the $6,500 threshold for the higher cash back percentage. Read more about how we Maximize Cash Back and Interest Earnings by sharing accounts.
  5. Feel Secure With Your Upgraded Benefits
    We usually choose our cards for the cash back or other rewards and not for the added benefits. But we actually have saved money by using the rental car insurance from AMEX, and if you think about it, some identity protection, however narrow the policy, is better than none.

Now, I’m not saying everyone should use credit cards. They have their pros and cons. They work for some people but not others. If/when you apply for and use credit cards, be aware of the risks and take responsibility for them and for your actions. If you get ripped off by fine print you didn’t read, you’re not entirely blameless because you could have canceled the card immediately upon receiving and reading the terms. Yes, credit card companies are tricky, but so are many other businesses.

You Control Your Spending, Not the Other Way Around

Psychology aside and whether or not credit cards cause higher spending, it all still boils down to one thing: choice.

  • Whether or not you are paying by cash or credit, you are still making an active, conscious choice to spend.
  • You are the one in control of how much you spend.
  • If you are in control, you can choose not to spend.

If you can’t control your impulse to spend, then you should cut up your credit card and keep your cash in a time-lock vault that releases set amounts of money at set times like those automatic pet feeders that release one compartment of food at a time when pet owners work late or go out of town.

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16 thoughts on “Who’s to Blame for Your Spending? You or You?”

  1. Good points. I think that too often people get caught up demonizing the evil credit card companies that put them in so much debt while forgetting to remember that they swiped the card.
    I think it is generally much easier to blame someone else for your problems and not look at your role in it.
    Working with a budget usually helps me from falling into this trap and also helps me keep an eye on where and when I swipe a card.

  2. Great post!!! We have four credit cards — two of them we pay off every month and the other will be done the same way as soon as we get them paid off.

    Also, I wanted to let you know that I’ve awarded you The Lemonade Award. Stop by my blog and pick it up!!!

    I really enjoy your blog!!!

    JT Locke
    The Frugal Housewife

  3. Fantastic post. The point of any company is to make money. You should only expect people to look out for your best interests if you’re paying them expressly to look out for your best interests (i.e. paid financial planners). And that’s because you’ve already paid them. I still would take everything with a grain of salt.

  4. “A grain of salt and a pinch of brain”… I love it!

    I agree that it gets old all these people talking about how companies are “stealing” money or “tricking” you. Yes, some are out and out shady. But most are simply being business-like.

    It’s the same reason I was shocked that so many people saw no problem with the “Freecreditreport.com isn’t FREE” article. I thought, Uh yeah, of course not! I thought they had made it pretty clear on the website, in the commercials. But everyone who commented on the post after I did said that if the company were TRULY honest it would have said things before promising something “free.” I guess I was just raised to believe that there’s no such thing as a free lunch. (Unless you have an Entertainment Book coupon.) But one person accused me of being “brainwashed”!

  5. I absolutely agree with the idea that we shouldn’t blame salesmen and credit card companies for trying to make money. I don’t like it when they attempt to rip me off, but trying to seal the deal is another thing entirely. They are all out there to make money. That’s how we all survive. It’s our bread and butter.

  6. Buyer Beware is my motto. And if someone trying to sell me something says “trust me” I really beware!

    I agree, business is about making money. I feel badly that it gets so sleazy at times. Especially when older people are taken advantage of.

    When someone devotes a lot of time,money and energy into taking advantage of people, it can be hard to defend against them. Case in point: Madoff.

  7. i don’t want to be held accountable for my spending ;) haha…nah, you know i do. it’s just good i learned how to stop spending so much! makes life a lot more simpler.

  8. Great points you have here. Credit cards can be of great use if you restrict yourself and only spend what you need. When we were still in the States I used my card for everything for the same reason you stated above – kept my money in savings longer. I’ve taken it a step further sometimes by calling the credit card company and getting them to give my a great rate of 0% or 1% for an extended period of time when I’m about to make a big purchase ($5,000 or so). I then take the money I was going to use to pay the bill and put it into a CD earning a higher rate than the one I’m paying on the card. Though this was in times past when CDs were paying more than 1%…

  9. Not sure I agree that all businesses main goal is to part you from your money. I know plenty of people, especially small businesses owners and employees that love how they serve and the money is a way to telling if they are doing a good job. The companies and employees love what they do, love to help people, and the people usually notice. Once a company starts to get to big this type of mentality gets lost.

    I do appreciate the sentiment that your are in control for the good and the bad. There just isn’t another way to view things that is anymore helpful.

  10. You’re right – it’s all about accountability. You have to control you. In and of themselves credit cards are fine… in fact, I could argue that you’re missing out of you’re not using your credit card for every conceivable expense you have if you have some kind of loyalty program on your card…(and you do – don’t you?)

  11. Thanks, everyone, for your great comments.

    @ The Happy Rock

    I’m sure there are small businesses who enjoy serving their customers. In fact, in the course of my very smalal business, that has often been the case when we’ve developed a rapport with a customer and are truly happy when they tell us how happy we’ve made them.

    But while I agree that not all businesses’ goal is to “part you from your money,” every business’s goal is certainly to make money, for that is the very definition of a business.

    @ Bill McCollam

    Yes, I do use my rewards credit card for every necessary purchase. I’ve been known to use my AMEX Blue Cash to buy a $0.41 stamp because I had to charge $6,500 before getting the higher cash back percentage, so everything I could put on the card, I did.

    Though that made me feel a little funny, the postal worker didn’t think it was strange; she sees it all the time and told me a lot of her customers use their credit cards for small purchases as a way to track their spending, which is another reason I like credit cards.

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