Why not to use Credit Cards

When possible I try to pay with cash. Here's why

  • Credit card transactions are used to track your spending history to target advertisements. Google has access to 70% of transactions from credit and debit cards for the united states (source. Not so for cash.
  • Credit cards introduce a third party to the transaction where it is often unneeded. For larger purchases or purchase from disreputable vendors the credit card company offers the service of temporary credit or consumer protection, but for everyday transactions these are not needed. There's no need to use a credit card to pay for lunch.
  • Credit cards introduce a transaction fee to cover the cost of these benefits. This fee is between 1-3% but the fee structure is complicated. This charge is eventually passed down to the consumer. But in any case it's money leaving the local economy and settling in the coffers of whichever bank is handling the transaction.
  • When card and cash customers spend at the same vendor, the cash customer still pays a price that includes the transaction fee. In this way cash customers pay more so card customers pay less.
  • Benefits programs are sources of loss, but the loss is offset by customers who fail to pay their bills on time. Thus credit card users who make use of benefit programs are subsidized by those who can't pay their bills. (Counter: exploiting these programs hurts credit card providers, I have no position here.)

Note: This post was originally written on 2018-03-11, posted with minor modifications.

social