Intriguing thought, putting the credit card companies out of business, but unlikely it would ever happen. But if all Americans decided in a unified movement to destroy their credit cards, and convert to a cash-only society, wouldn’t it be kind of cool?
Suze Orman, a well-known personal finance writer, is attempting to encourage Americans to do just that. On her CNBC show this past weekend, she asked viewers to join her in a ”Back to Cash” movement. Citing that it was “time to go back to the good old days – the times when you literally paid cash for everything”, Suze asks us to stop using credit cards altogether. On her website, she vehemently pleads for your support and has a pledge form for viewers to sign on for committing to go cash-only for selections varying from a minimum of a week, up to 6 months.
I signed on to the bandwagon, if for no other reason than to see what the current results were as far as how many folks supported her cause (and how many people selected the option: “Are you nuts? I can’t live without my credit cards!”). The current talley was out of approximately 3900 responses, 63% of voters had agreed to go credit-card-free for 6 months; 21%, for 1 month; 13%, for a mere week; and only 4% had shunned the pledge altogether choosing to call the idea “nuts”.
So what is the big beef with credit card companies that is causing this stir? (As if we don’t know). Here is what Suze’s proclaims on her website:
Credit cards are increasing fees and interest rates – even on good customers! Suze says it’s time to make a statement! Go back to paying for things in cash. Avoid the fees, interest rates and late payments. You’ll probably spend less and you will take your power back!
Of course this has been coming on for some time, and we are all pretty frustrated about it. Some more than others, particularly irate customers such as Ann Minch who berated Bank of America this past summer and got 15 minutes of fame over it (as well as an interest rate reduction). For more details on her story, read this blog post.
So is it possible to live without a credit card? Sure, but the convenience of credit cards is hard to give up, plus you get extra warranty protection and often rewards such as cash back or airline miles. If you are one of the few and proud who never carries a balance, uses credit cards for every purchase and maximizes rewards as a result, these changes are having minimal impact on you.
So how did I vote? I selected the “nuts” option. Most people that know me would agree that it fits well – and I think that might be a good thing.
How would you vote? Tell us by leaving a comment!
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One of the reasons I use credit cards is that it allows me to carry much less cash in my purse and I feel less vunerable to being robbed. Although I can be robbed of my cards, should that happen, I can call the credit cards and have purchases stopped. Robbers are usually looking for cash.
Being one of the lucky ones who has not paid interest on a card for over 10 years, I would encourage people to pay down on their cards as soon as possible. Even if it takes a long time, the goal is to use the card issuers money for as long as possible, and pay off the card in full each month. This way, you have good credit management, don’t have to carry a lot of cash on hand, and get to the money in your account longer. Although interest accumulated may only be pennies, it beats paying out the extra dollars to the institutions who seem to have no limit to the amount of money they take from us.
The only way to use credit cards is to not carry a balance every month; think of it it as a bill that has to be paid at the end of the month. Credit card companies are still making money off of you (since they charge the business a % fee to use their ’service’), but you will not incur exorbitant fees and be paying them more money.
I know that there are people saying: “Yea, that’s great for you, but I already have $8,000+ in credit card debt.” Layout a plan to payoff the debt. Start with the smallest balance (if you have multiple) and pay extra each month. When the first is paid off, pay the same amount into the next card. In a relatively short amount of time you can be free of your debt.
Having credit card debt is throwing your money away. Just don’t do it. Here is a resource for getting on track: http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp
On a side note, try to spend cash at small or local businesses. If you use a credit card they lose 2-3% to the credit card company. If you spend cash/check then they get to keep that money!