Charge It! But Watch The Rewards

When I was in the 6th grade, Mrs. Nygren (my teacher, may she rest in peace) used to admonish the class that no one should ever buy anything on credit except for a house. She was adamant. If we could not pay with cash, we should not buy what we wanted to buy. Cars, boats and other big ticket items were intended only for those of us who could deliver cash in full.

Even as a 12 year old 6th grade student, I could not agree with Mrs. Nygren. She was opinionated. I was more opinionated. I vividly recall arguments in class — they were not organized enough to be characterized as debates — about the value of building up good credit by taking on reasonable debt. My father had alw


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7 Responses to Charge It! But Watch The Rewards

  1. Ann says:

    I have one credit card ’cause it generates a “virtual” account number when I purchase something on-line. (Yes, I realize that https sites are supposed to be safe, but…) It gets paid in full each month.

    I did so much traveling when I was in corporate, that it doesn’t appeal to me much these days and I don’t have kids’ college to worry about.

    I paid cash for my most recent car and paid off my mortgage(s) as soon as I could. There’s a lot of freedom in being debt free.

    That being said, a small loan that gets paid on time (or even better, early) to get credit established is fine. Too many people, however, don’t just use them like that. And even more young people don’t realize the cost of NOT paying off your card each month!

    Too many people use credit cards for instant gratification, rather than wisely as you do, David. That’s why so many are in so much trouble now.

  2. Bill M says:

    I have 3 credit cards that I use for all my purchasing.

    1. I get 3% back at groceries/restaurants
    2. I get 5% back at gas/any thing auto related and cell phone bill
    2. I get 2% back at everything else that gets deposited into a brokerage account which gets invested in a balanced mutual fund.

  3. Ann says:

    Hmmmm. I like that brokerage acount idea. Maybe I’ll start opening some of those offers I get rather than shredding them all!

  4. Shahrul Azwad says:

    I still believe that rewards still don’t justify credit card use. Cash is still king!

  5. Cindy M says:

    I have several credit cards I keep but rarely use and have always paid them off immediately when I do use them. I have come to the conclusion that the “rewards” stuff is not all that useful/ interesting to me in my lifestyle now and frankly leads me right back down the old garden path to want things I nearly always find out in the end aren’t that rewarding. Now granted, a trip to Hawaii would be fabulous but not much chance I’m personally gonna accumulate that kind of pointage, haha. I accummulated maybe 15,000 points and took my mom out to eat for free recently, but we frankly were not that impressed with the meal. Grateful, yes, but not impressed; free is free, after all. We’re both good cooks with full freezers and like our own cookin’, so there you go.

  6. Persephone says:

    My favorite reward card is my LUXE card from Banana Republic. With it I get free shipping on any item (no matter how litttle the cost) from Banana Republic, Gap, Old Navy and Piper Lime. I’ve had it for years and have saved hundreds in shipping costs over the years.

  7. PeteTheJanitor says:

    The fact that you are delaying the actual payment of your purchases for 30-60 days is another great thing. If you spend $1000 on credit cards each month (instead of cash or check) you will always have at minimum an extra $1000 in your checking account. My checking account earns 3.5% APR so this is a good thing.

    Using $1000 per month as an example, if you have a normal discover card this you would earn a minimum of $120 in a year from cash back rewards. In addition if you have a high interest savings or checking you’ll earn $35 in extra interest. That’s ~$155 in a year for doing nothing, all while building your credit. Put that extra money towards your high interest debt (car loans…etc) and you’ll see the snowball start to roll.

    If you have the discipline to not buy what you can’t afford, owning a credit card is a no-brainer.

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