Saturday, May 28, 2011

No New Credit Cards Without Gifts

How glad I am not to be caught in the toils of the credit card companies. Another offer came in the mail today, full of talk of penalty fees and other disclosures of punitive rules if I do not pay my balance in full and on time. Frankly, I can’t see any reason to apply for this credit card. It didn’t even seem that the credit card company was making any effort to sell me on their card, other than the usual balance transfer offers. I have made use of balance transfers in the past to my advantage, but recently I decided that keeping some money liquid made more sense than borrowing it from these companies. Especially since at the middle-class level of investments where I sit, the earnings on my savings currently are pitiful.

Yes, pitiful. Less than 1%. Sometimes less than .1% Far less than the 3% or 4% a credit card would charge for a cash advance. Obviously in this economic climate it is cheaper to use my own money to finance what I want to buy. What is the point of saving when one’s money cannot earn money? Ah, I know. To have cash when I need it. Presto. The reason to keep rainy day savings in liquid form, not locked away in CDs or stocks.

This isn’t always the best strategy. If and when the Big Inflation that everyone predicts actually happens, it may make more sense to get some quick profits from CDs or other guaranteed investments. Maybe banks will hand out toasters for opening CDs, the way they did in the inflationary 1970s. Not that I need another toaster, but we all like free gifts, don’t we?

That’s my primary objection to the recent credit card offers I have received. Not only are they full of threats, but also they contain no free gifts. Oh, I can earn 1% cash back on my spending, but then I’d have to spend, wouldn’t I? Nah, not interested. Many years ago, I banked at the Bowery Savings Bank in New York. Almost every time I visited a branch, they were handing out a little gift. I still have the bright red yardstick they gave me one day. Who buys yardsticks, anyway? They’re always freebies from someone. Well, I loved the Bowery Savings Bank because they gave me those little gifts. Still do, although they have long since been swallowed up by another bank.

So, no, I don’t want your credit card. I don’t want to make myself the victim of yet another bloodthirsty credit card company whose only intention is to trip me up and charge me fee after fee. And yes, I want gifts. Real gifts.

1 comment: said...

Though I don't debate what you wrote, I don't think it will be helpful. A better restatement of your premise would be: "To get out of debt you must learn to live on cash", which is a different skill set. One example is that to live on cash you must keep sufficient reserves of cash liquid to be able to handle emergencies, or just larger purchases. You have to plan out your spending. Credit and cash change time.