Posted by Lending Club :: February 4, 2009 @ 10:17 amOne of the side effects of having my credit card stolen is that I've been forced to carry more cash. The experience has reminded me not only of my normal reliance on my credit card but also how much easier it can be to spend cash.
On the first point, it has been really enlightening to notice how often I reach for my credit card. That has become my normal habit to earn as many reward points as possible, and this only works well for me since I always pay off my balance in full each month. Not having my card available (until the replacement for the stolen one arrives) has actually felt like a real burden. Having a card on hand can lend a sense of security since credit is almost universally accepted and could help to overcome nearly any short-term emergency situation.
It may sound strange to say that it's easier to spend cash, but for me that's really true. For some people, the abstract nature of credit makes it the easier method to spend, since the physical limits of available cash may help you to consciously recognize how much you are spending. For others, like me, cash burns a hole in their pockets. Since I'm not used to carrying it, when I do have some cash I feel more inclined to spend.
My recent experiences with cash have been very insightful. Trying such an experiment could have a similar effect on you. Those who normally use cash could try using their credit card more. This group should only use credit in a responsible manner, namely spending only the amount that they'll be able to pay off in full when the bill arrives. Diehard credit card users could try a week using only cash. Going outside of your financial comfort zone may highlight habits (good and bad) that you didn't even realize you had.
Which form of money do you use most, cash or credit?
Print This Post
3 Comments
I tend to use credit almost exclusively for day-to-day
transactions, actually going out of my way to avoid cash-only
institutions. The big-surprise is was on a business trip to NYC, I
had to resort to cash for many common day-to-day expenses.
Budgeting became extremely difficult as I was never willing to
carry a large quantity of cash. Frequent trips to the ATM combined
with many places refusing to give receipts made it all but
impossible to understand how I spent money (and submit expense
reports).
I use my debit card most of the time because I receive my checks
through direct deposit. It's a bit of a hassle to withdraw cash
from my bank's atm because it's off of my regular driving route.
Otherwise, I would use cash more than my debit card because I'm a
hands on person. I do better when I can physically touch a concept
like "money". It helps me not to overspend especially since I can
section off $50 for this category, or $75 for another. I currently
get no rewards for using my debit card (and I hate accidentally
overdrawing!!) and I think that credit cards are evil. So I don't
use them.
@james: I too find it very frustrating when cash is the only
accepted form of payment. Thanks for sharing your experiences.
@galaxia: You certainly seem to have a good system going. I would
advise you to read our post "http://blog.lendingclub.com/2007/08/09/common-atm-mistakes-and-how-to-avoid-them/">
ATM Mistakes and How to Avoid Them to make sure you take proper
precautions with your debit card. Credit cards can have evil
effects when used improperly, but responsible use can also have
some wonderful benefits. Unless you take the right steps, you might
even find that your debit card end up being more evil.
Leave a Reply