When is it OK to use your credit card? Some might say never, and with consumer debt topping 1.7 trillion dollars this year, maybe they’re right.* But why are credit cards so bad, and is going all cash really the answer?
Credit Cards Distance You From Your Spending
People spend more when they pay with their credit card. It’s inevitable. When you pay with cash, you feel every penny. You only have so much cash on hand and each dollar you spend is a dollar less in your pocket. This direct connection with your spending keeps things in perspective. Spend $50 bucks on eating out this week, and you’ll feel the emptiness if your wallet by the end of it.
In contrast, when you pay with a credit card the payment happens out of context. You spend $5 on a sandwich one day, $6 on a burrito the next, and nothing adds up. Not until the end of the month when you’re hit with a $300 bill that you don’t understand, and may not have the money to pay in full.