Thursday, July 3, 2008

Why I Pay for Everything with Credit

George Carlin used to have a bit about people who pissed him off by using credit to make small purchases:

"Here's something I can do without: People ahead of me on the supermarket line who are paying for an inexpensive item by credit card or personal check. People! Take my word for this: Tic Tacs is not a major purchase...Folks, carry some fuckin' money around, will ya? It comes in handy! No one should be borrowing money from a bank at 18 percent interest to buy a loaf of bread."

When I first heard this it was the 90s, I was a teenager and I laughed until my stomache hurt. These days I *AM* the person swiping their card for a .56 cent purchase.
So why do I do it?

1. Credit is easily tracked.
When I look at my statement I can say "WTF did I spend $33.58 on at Target?" instead of paying cash and forgetting about it. When I look up old statements I know exactly how much a gym membership cost instead of some vague number my memory hazed out.

2. Added security.
AMEX doubles original manufacturer's warranty on any item purchased with their card. They will also accept returns if the merchant will not (comes handier than you'd think) and take back clothes that tear within 90 days of purchase. Thanks to on-line banking even sans receipt I can tell the merchant exactly when and how much I paid for an item.

3. Lost wallet? No problem.
If I were to lose my wallet I'd be out $20 in cash and the time spent calling credit card companies asking them to send replacement cards.

4. Rewards.
You're doing credit card companies a favor by using their services; let them pay you for it. I carry one card for groceries and drugstores, another for gas and a third for "sketchy" or large purchases. Around the holidays I cash in points and shop with gift cards. My new AMEX will automatically give me cash back on monthly purchases. Why would I pay cash with incentives like these?

5. Its faster.
Most of the places where I shop are manned by negligent teens or overly cautious middle aged cashiers. Have you watched someone dole out 68 cents in change? I'd rather scratch chalkboards. Meanwhile credit can be processed before the arthritic cashier has finished bagging.

And really the top reason why I use credit for everything:

I'm kinda responsible.
I've read plenty of studies showing credit drives users to spend more. I understand the disconnect between working, direct deposits and credit card statements paid on-line. However I have never been surprised by a credit card statement.

If you tend to avoid opening bills because you can't stomache the total and don't want confirmation of how much you owe - then I strongly advocate paying for everything in cash.

However if you can afford the things you buy and enjoy playing with personal finance there's no reason to carry more than a $20 in your wallet.