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.)
- Use Your Card Wherever You Go
Only on the things you need — groceries, gas and necessities.
- 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.
- 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.
- 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.
- 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.