Plastic Control

My finances are in ok shape, and one reason is the discipline (one of the few that I’ve stuck to over the decades) of paying off credit card balances. It was difficult in the early years when we had seemingly unlimited spending needs, yet had to service mortgage, car, and student loans as well as put something aside for retirement. We managed by deferring gratification and living with old and partially working stuff. (Consequently our ongoing priorities now include simplifying our life and clearing the clutter, but that’s another discussion.)

Credit cards have compelling advantages, e.g., they help keep records, reduce the risk of carrying cash, and give customers bargaining power in disputes. But they need to be used in moderation like other controlled substances. Below is a handy list of 15 times when you shouldn’t use a credit card.

1. After midnight.
2. When you're near your credit limit.
3. When considering an extended warranty at the car dealership.
4. [left blank - sic!]
5. If you're paying off one card with another, and it's a habit.
6. At a flea market.
7. If you think you're building your credit history.
8. If you can't pay for half of the purchase with cash on hand.
9. When it's all about the rewards points.
10. When you think prices may drop.
11. To buy something from a website with an obscure foreign extension.
12. If you don't have a plan for paying it off.
13. If you're charging things that you used to pay cash for.
14. When you feel that you'll save money by purchasing something you want rather than need.
15. When the temptation for a big impulse buy strikes.

That’s good advice, especially #6 and #11. I once used a credit card at a small music store south of Market, and a series of small purchases hit within the next 24 hours. The credit card company, Discover, reversed the charges when I complained after receiving the statement, but the lesson was learned: I pay cash if I don’t know the merchant.

Speaking of Discover, I’m using that card more, even on under-$5 purchases at fast food restaurants, because they’ve, er, discovered a weakness that’s not on the list. Each use triggers an entry in a $1 million sweepstakes. Although my rational brain knows that the expected winnings are infinitesimal, I’ll now whip out the plastic, whereas I wouldn’t have bothered before. After all, how the devil do you think this could harm me? © 2010 Stephen Yuen