Hypothetical: You get a new credit card with 2 options. Based on your spending habits you can earn $500 annually in cash back or $1,000 worth of either airline miles or hotel points. Do you take the cash or the travel?
I barely travel and I sit in this house all day so I can save it
I don't like to travel. I'd rather have the cash.
Gonna be flying back and forth to CA a lot so I'd take the $1000 for airfare.
We don't travel anymore. It's too difficult dealing with the migraines, so I'll take the cash.
The miles if they are applied legitimately, but in my experience, since they aren't, ever, I'll take the cash.
Neither. You can't beat the bank at their own game. You're going to get stuck on the road one day with a car repair and not enough emergency funds to pay for it and you're going to put several thousand dollars on the card. Then spend months trying to pay it down. All they while spending a lot on a huge interest rate. They will get their money from you.
How do you pay for the emergency without a credit card if you don't have the funds? 🤔
That's what you put $100 a month or more into a savings account until you have a thousand or more. Then you never have to borrow for little emergencies. You might as well save now because you know that Murphy is going to show up one day and he's bringing the in laws. Besides. You're still going to have to pay even if you use a credit card. But this way you're not paying them interest. The bank pays you.
I have $1000 in the bank. I blow a tire and get towed to the repair shop. I have to pay the tow truck driver now. How do I pay him if I don't have a credit card handy?
You have a debit card and an iPhone don't you. Takes ten seconds to transfer the money to your checking account. Way less risky than a credit card. Those things will ruin your life.
Why not have a credit card if you have the savings anyway? It's much simpler. The problem comes when you spend more than you actually have. Otherwise, credit cards are more of a benefit than a liability.
They are a benefit to the bank that wants to loan you money. If you have money why do you need to borrow it? Even for just 30 days. What's the point? If the shït hits the fan and you get sick and lose your job, or your company tells you they don't need you anymore to make widgets, then what are you going to do when the bill comes? Why take the risk?
The point is that you get cash back. Why not do that? Just promise yourself that you won't ever carry a balance and you won't ever have any problems.
'....and he's bringing the in-laws.' That's a good one. Your words of caution about a credit card is safe advice. It takes discipline to effectively use a credit card. For my part, I haven't carried a credit card balance since 1988. Between cash back & travel perks....credit card use probably puts $3k a year in my pocket with no interest paid.
Squid is very disciplined. Not many are. There's millions of people drowning in credit card debt that never intended to live like that, but something came up, and the card was in my wallet, and I meant to pay it off this month but something else came up. The never ending story. It's a trap most get stuck in.
I agree with you, access to easy cash can be a risky proposition.
Hmm well I'm glad I'm not one of those people.
I get plenty of perks by using my credit card as well. The credit card company makes their money from the retailers, not from me.
Those perks sucker people in. If you can do it great. Just don't get caught up in the trap like millions of other people.
I haven't paid credit card interest in 7 years.
You're very rare.
And I never have. It's just not an option for me.