How can it be a gimmick? Like VDC I pay our balance each month and receive money for using the card. I also have a cash reward program for paying bills on line.
Another thought-Credit cards do make great emergency cash-My Boss likes to use His GM credit card, as much as He spends,it does give him a pretty good down payment-Kevin
An additional benefit of using credit cards is to boost your FICO credit score.
By having multiple cards, but by never charging more than 5% of the credit limit on those cards and by paying off the bills in full every month for the past 40 something years, my FICO score is 842, out of a possible maximum score of 850.
When you have a very high FICO score, you get the best rates for home mortgages, and for car loans–even though I tend to pay cash for my cars. Even things like insurance rates can be impacted by one’s credit score, so by having an excellent credit score, I am benefitting in multiple ways.
And, believe it or not, some employers base their hiring decisions–in part–on one’s FICO score.
No, I don’t plan on returning to the workforce, but if I did, my excellent credit rating (as a result of my prudent, totally-controlled use of my credit cards) would likely make it easier to be hired.
I just want to go on record as saying I have nothing against credit cards…for other people. I use debit cards exclusively because they are free from my bank and credit union. I never receive a bill because the money that I’m spending is my own. I look at credit cards as future debt. Some people can use them to their advantage and some can’t.
I only buy used vehicles because I can easily spot a bad one with my many years of experience. A lot of people can’t do that because they don’t have the experience. That’s why I always recommend having a used car inspected by a good independent mechanic. I don’t have anything against new cars either but “used” is new enough for me. Besides…I’ve found out that the “newness” wears off of a new car at about the same rate as for a used car. I can live with that.
I also use my CC for most everything, no fee, get 1% back, pay off monthly, so no ‘gimmicks’ involved.
Regarding Asemaster’s comment:" You do realize that these rewards cards are able to give you such deals by charging merchants a higher transaction fee for these cards than standard Visa/Mastercard or debit cards, don’t you? And that these businesses that are tired of paying for your Hawaiian vacation just raise prices across the board for everyone to compensate for the expense."
Another thing they do is, it seems like every store nowadays has their own credit card they want you to apply for. As in, “If you apply for OUR credit card we’ll take 10% off your purchase today and enter you in our sweepstakes for a free vacation”. Sounds good, but I see it as a trap. If I went for all these offers I’d have a stack of credit cards heavy enough to bust the springs on my car. And then you have to keep track of all these credit accounts and make sure you don’t forget to pay one.
And then they want you to sign up for their store loyalty card (another card to carry), want you to donate a dollar or five to the charity they’ve partnered with, want you to spring for the extended warranty (even on under $10 doodads). . . Remember when you could just walk into a store and buy something and that was the end of the transaction?
P.S. Saves me a lot of money though, because I try to avoid shopping as much as possible because I know its hard to get out of a store without an argument.
Credit cards are a great convenience and money saver for me. I don’t have a card that I didn’t get at least $100 to take and they all give me a minimum or 1% or more. I pay the bill every month so I incur no interest or service charges. And I don’t have to go to the bank or ATM to get cash more often than 4-6 weeks.
My wife and I each got a Marriott Rewards card that gave us 2 nights in a Paris hotel in sight of the Arc de Triomphe that went for $700 to $900 per night, one night in Dublin and 2 Nights in Green Bay.
I also pay nothing for my bank accounts and pay no credit card fees.
No one should ever order anything with anything but a credit card. If the merchant or say, furniture store goes out of business, your debit card, check or cash is GONE. Your credit card will return your money if you don’t get the merchandise.
Most of my credit cards double the warranty on anything you buy with up to a one year warranty and many give you free rental car insurance. Also, some have no foreign transaction fees.
Oh how far we have come. I remember the only credit cards I had were a Daytons (now Target) that allowed buying concert tickets, ties, and shirts, and a Standard Oil card that allowed buying gas on the road. There were no Visa, Mastercards, or others back then. When I needed cash, I went to the bank and cashed a check that cost me ten cents each time. I got 3% on my CDs at the bank. I could deposit $50 and get either a power saw or a place setting of china, depending on what bank I went to. That’s how I got my first tools and our first set of china. I remember we needed more cash on a trip once in 1961 so my dad went to a bank to cash a check. The bank called our home bank and talked to the VP to insure there were funds and then no problemo.
Is it really better now? And nothing is free-somebody is paying for that free room in Green Bay, its just not you. Maybe its that couple just getting started and paying 24% on their CC balance, or the local merchant on a razor thin profit margin, but somebody pays.
Reminds me, I should send in my 11% Menards rebate slips before its too late.
And nothing is free-somebody is paying for that free room in Green Bay, its just not you. Maybe its that couple just getting started and paying 24% on their CC balance, or the local merchant on a razor thin profit margin, but somebody pays.
Exactly. Credit/debit card fees are now simply a cost of business, part of the overhead just like the rent and the electricity bill. And just as higher rent and electric bills will cause a business to raise the rates to cover them, we now simply raise the rates to cover credit card fees, even though not all people use them. Next time you’re cashing in your sky miles remember part of your trip came from the old lady counting out $20 bills from her social security to pay for her brake job.
??? Now that’s pushing it. My using a card costs the lady spending cash? Nope
Hey Tex, doesn’t the use of credit cards increase the cost of goods for everyone, including the lady with the $20 bills?
Yes, because as I need to recover the money lost paying credit card fees I simply raise the price for everyone across the board. I can’t just raise prices for people using certain cards.
The rent goes up, the labor rate goes up. Insurance premiums go up, labor rate goes up. Credit card fees go up, labor rate goes up. For everyone.
I could just go the route of the taco trucks, smoke shops, etc. and say .75 surcharge for credit cards, but I think adding fees other than sales tax to the posted price of a product is unprofessional.
As was suggested, the cost of processing credit card purchases is already factored into retail pricing. Most merchants are savvy enough to not itemize it as a separate fee, and instead simply fold the cost into their pricing. So, yes, that little old lady is paying extra, even if she doesn’t use a credit card, just as I am paying extra for the convenience of using a credit card.
That being said, if I don’t reap the benefit of rebates on all of my credit cards, then I am actually paying for something from which I derive little benefit, and I am not about to “leave money on the table”.
Most of us are savvy enough to refuse to pay for the “ADP” sticker affixed to the window of some hot-selling cars, and I see this in a similar light. If you’re not willing to allow a car dealer to add several hundred dollars to the cost of a new car, why would you pay a merchant his hidden CC processing fee without taking advantage of the rebates that exist? Unless the entire concept of credit card rebates is ended on a universal basis, those who don’t take advantage of those rebates are simply…cheating themselves.
I don’t understand why anyone would use a credit card that gives you airline miles. Just use a card, as I do, that pays 1-3% cash dividends on all purchases, then take the dividend as credit on the card, or as a check, your choice. I have one card that pays 3% on amazon.com purchases, and another that pays 3% on gas and restaurant purchases. Neither have any annual fees.
Thus you can use the dividends for any purchase you desire, including airline tickets, and skip all the airline hassle. From what I can tell, the dividend is about the same.
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^
I’m not much of a traveler anymore, so getting airline miles is more or less a no-go for me to begin with. However, I agree that getting the cash is much more…lucrative.
Good morning - I think this one is largely moving away from car-related issues. Would you mind redirecting it? Thank you.
Gladly, Carolyn!
I always “pay at the pump” with my Amex credit card that yields a 3% rebate on all gasoline purchases ($2.55 per gallon at Costco a few days ago!).
Can somebody explain to me how I am hurting somebody else financially by doing this when I fill my gas tank? Will the price per gallon for that little old lady magically decrease if I don’t pay for my gas in this manner?
^ in a small measure, yes. American Express and Discover have the highest merchant processing fees of any cards. At the end of the month, when I look at the hundreds I have paid for credit card processing, I may decide that the cost is too much to absorb and decide to raise the price of gas .01/gallon. Now is that penny/gallon hurting somebody else who pays cash? Probably not hurting them, but they are paying it. The answer to that for gasoline is to buy it at a station that offers cash/credit pricing.
A not easily quantifiable reason for higher prices based on credit cards is cash flow or float time. If you sell me widget today for $100 and I pay cash, you have $100 now. If I pay with a debit card you’ll get $98.50 tomorrow. If I pay with my AmEx card, you’ll get $97 on Wednesday. I think it’s entirely reasonable for you to raise your prices a little bit in light of that.
"I think it's entirely reasonable for you to raise your prices a little bit in light of that."
I readily acknowledged that reality when I said “the cost of processing credit card purchases is already factored into retail pricing”.
In light of that reality, please explain how I am helping anyone (other than banks) by not taking advantage of rebates that are offered by banks & credit card companies.
The banks and credit card companies have little to do with this argument, since they don’t pay for the rebate/miles/rewards programs. They simply collect the money from other people and then dole it out to you. So in the long run if you didn’t take advantage of these “rebates” and no one else did perhaps eventually you’d be helping the people who don’t use these programs. Not likely to happen. It’s a case of if you can’t beat them, join them.
The use of rewards cards increases the cost of good and services like auto repair, tires, oil, for everyone, cardholders and cash users alike.