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The losing game of the Credit Card
May 6, 2017
8:44 pm
JustMe2016
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https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/

"It turns out that multiple behavioral economics studies back up these assertions. One of the most often cited studies is one conducted by Dun & Bradstreet, where the company found that people spend 12-18% more when using credit cards instead of cash. McDonald’s reports its average ticket is $7 when people use credit cards versus $4.50 for cash"

https://www.nytimes.com/2016/03/27/your-money/credit-cards-encourages-extra-spending-as-the-cash-habit-fades-away.html?_r=0

"Credit Cards Encourage Extra Spending as the Cash Habit Fades Away"

https://www.nytimes.com/2014/10/11/your-money/the-slippery-plastic-slope-to-overspending.html

"One of the most well-known studies, published in 2001 and titled “Always Leave Home Without It,” showed that in certain contexts, people were willing to pay up to twice as much for the same item when paying with a credit card instead of cash. This is known as the “credit card premium.” "

Of course, this doesn't apply to you sf-wink

May 7, 2017
5:48 am
Bill
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I would guess the McDonald's data is because more people just use cash until they're buying something over $5 or so.

May 7, 2017
6:09 am
Top It Up
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On a regular day for me, I see way more debit card use than I do credit cards ... both young and old demographic ... using their cards for amounts as low as $1.

May 7, 2017
6:59 am
JustMe2016
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Top It Up said
On a regular day for me, I see way more debit card use than I do credit cards ... both young and old demographic ... using their cards for amounts as low as $1.  

Behavior with debit cards is identical to CC. I also read that even though it is too new to have studies/data on it, Apple pay seems to be the same thing.

But the point I wanted to draw attention to is that I see a huge preoccupation with rewards/cash back in this forum and it is easy to lose sight of the fact that any over-spending negates all benefits. What's the point of getting 4% back if using a CC makes you, on average, spend 10% more?

Another beef I have with CC is that it is the perfect and easiest way for politicians, businesses and Law Enforcement Agencies (the police) to spy on you. Data of your purchases are kept forever. Just like Costco keeps forever the record of whatever you purchase through its membership card. And no, businesses/LEA/... do not (always) need a warrant to get access to your data. 'Favors' is done between 'organizations'. A CC is like a diary of your financial life.

As far as I'm concerned, using a CC is a double-negative. First, you spend more than you would otherwise. And second, you are exposing very private aspects of your life.

P.S. Yes I have three CC, but I also use cash.

P.P.S. Yesterday evening I was watching an episode of the British show SuperShoppers (season 1, episode 3) and in it they were talking about baby carriages selling for $5,000CAD. Companies had done studies on male consumers and found out that by adding a logo like BMW and making the carriages look more rugged, they could target the male buyer instead of targeting the moms. The primary goal of any marketing dept. is to get you to spend more. And knowing your financial habits through the use of CC is vital information.

May 7, 2017
7:31 am
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JustMe2016 said

Another beef I have with CC is that it is the perfect and easiest way for politicians, businesses and Law Enforcement Agencies (the police) to spy on you. Data of your purchases are kept forever. Just like Costco keeps forever the record of whatever you purchase through its membership card. And no, businesses/LEA/... do not (always) need a warrant to get access to your data. 'Favors' is done between 'organizations'. A CC is like a diary of your financial life.

... And second, you are exposing very private aspects of your life.
  

That's WHY I like to use Apple Pay for both my DC and CC. Apple Pay uses a Secure Element (token) that transmits a Device Activation Number (DAN) at Point of Sale and not your name or your actual card number - only the FI knows the correlation between the DAN and the actual card number. I never use store loyalty cards. And while my card security has increased dramatically, my spending has not.

May 7, 2017
9:02 am
Rick
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I never use cash, rarely use debit and can count on one hand how many times in my life I have not paid off the CC monthly in full. Doesn't make sense to me to use cash/debit when it is sitting there earning interest and I get free stuff for using the CC. I'm sure they love me...no interest charges and paying me rewards. Not really concerned about a permanent record of my transactions. Probably more of a benefit to me to have a record of all my purchases than for anyone who would have any interest in my credit charge history. Worst that can happen is they find out how much I eat out every month. The real problem is generations of people going through a public education system that doesn't properly prepare them for managing their money when they get into the real world. Getting you're first credit card with no proper control or education is like giving new drivers a Ferarri and tuning them loose on the roads. Disaster is inevitable.

May 7, 2017
9:57 am
JustMe2016
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Rick said
Worst that can happen is they find out how much I eat out every month.   

Obviously how much you spend while eating out each month is of interest to some parties. But what can be even more interesting is; were you alone or did you eat with someone else? Was it a woman you were eating with? Are you married and are you eating regularly with another woman? If a divorce is in the cards, a private investigator would certainly want to know where and when you go out to eat so he can wait until you show up and possibly catch you with another woman. A picture is worth a thousand words.

Or maybe you had 3 bottles of wine and there was a hit-and-run accident about the time you left the restaurant and it was a dark-color car like yours...

Or maybe you ordered some sex toys and the same toys were found on the scene of a crime where a rape took place. So now you are among those the police will investigate. You are now a suspect. More than one person has been wrongly convicted of a crime they never committed based solely on circumstantial evidence. Court cases can be built on bits and pieces from many different aspects of one's life.

All little things that add up when building a case in a court of law.

May 7, 2017
10:05 am
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With all those bugaboos hanging over you ... how do YOU ever leave your house?

May 7, 2017
10:07 am
Cranston
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JustMe2016 said

Obviously how much you spend while eating out each month is of interest to some parties. But what can be even more interesting is; were you alone or did you eat with someone else? Was it a woman you were eating with? Are you married and are you eating regularly with another woman? If a divorce is in the cards, a private investigator would certainly want to know where and when you go out to eat so he can wait until you show up and possibly catch you with another woman. A picture is worth a thousand words.

Or maybe you had 3 bottles of wine and there was a hit-and-run accident about the time you left the restaurant and it was a dark-color car like yours...

Or maybe you ordered some sexual toys and the same toys were found on the scene of a crime where a rape took place. So now you are among those the police will investigate. You are now a suspect. More than one person has been wrongly convicted of a crime they never committed based solely on circumstantial evidence. Court cases can be built on bits and pieces from many different aspects of one's life.

All little things that add up when building a case in a court of law.  

🙂 🙂 That is when you should use cash 🙂 🙂

May 7, 2017
10:22 am
JustMe2016
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Top It Up said
With all those bugaboos hanging over you ... how do YOU ever leave your house?  

The greatest education I ever got was when I was working in co-operation with the LEA. It was a real eye-opener on what's really happening in the real world.

I'm not advocating to commit a crime or break the law. I'm simply saying safeguard your privacy. Human beings are not little toys for businesses and gov. to play with.

May 7, 2017
10:38 am
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I would suggest that Italy NOT be a part of your travel plans anytime in the future. Want to check into a hotel, you ain't doing it without them taking a photocopy of your Passport; want to purchase a local SIM card for your smartphone, several countries demand that cellphone storefronts take a photocopy of your Passport.

Travel outside of Canada, in general - your Passport will be run through a scanner at check-in for your flight and again scanned at your point of entry to the foreign country.

May 7, 2017
10:56 am
JustMe2016
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There is no need whatsoever to leave Canada in order to be spied upon 😉

May 7, 2017
11:02 am
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Sorry man, it's just all over-the-moon paranoia ... just go out and live your life.

May 7, 2017
11:09 am
Jon
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This is certainly an interesting topic and it should have more research. Especially after controlling for the confounding viable of people making big purchase using credit card is accounted for.

May 7, 2017
1:36 pm
Rick
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JustMe2016 said
All little things that add up when building a case in a court of law.  

All the scenarios you describe could also provide an alibi. I guess I'm too law abiding. I drive for a living so I need my license to survive. My blood alcohol limit when I'm out is 0% - I'm always the designated driver. Don't fool around so not worried about the wife having me followed, and in the age of DNA analysis, even innocent people convicted decades ago are being cleared. Always happy to cooperate with local law enforcement and have never been convicted or charged with anything. Government, corporations and hackers are always a possibility, but there is no way around that except to go 100% off the grid, and you can't even get by without a credit card, credit rating, the internet or phone these days, so not an option. If I could just get those stupid viagra ads to stop following me around the web, I'd be happy. I'm 60 not dead! LOL!

May 7, 2017
1:49 pm
JustMe2016
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Top It Up said
Sorry man, it's just all over-the-moon paranoia ... just go out and live your life.  

I was sarcastic 😉

May 7, 2017
1:58 pm
JustMe2016
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Rick said

If I could just get those stupid viagra ads to stop following me around the web, I'd be happy.

Install CCleaner on your pc/laptop and have it automatically 'clean up' after you close your web browser. You can also do an occasional more complete cleaning by hand once a day. I use CCleaner PRO. Give it a try there is a free trial. Be careful when setting options of what you want deleted (left side of your screen in CCleaner).

After a few days you shouldn't have ads targeted to you based on web sites you visited, or searches you have done.

https://www.piriform.com/ccleaner/download

May 8, 2017
2:21 am
Twotons
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I like the detailed monthly CC statement bc it serves as an excellent cash management tool. Its easy to see where cash is being spent and areas where spending could be reduced. I try to run every dollar through the CC, even the $1.90 Tims coffee gets charged, just to track as much cash spend as possible.

And, now that the CC industry has become more competitive, why not take advantage of the returns and welcome bonuses being offered? Its easy risk free money...assuming you can excercise some fiscal responsibility. And, if not, that works too, as someone has to pay for the travel and cash rewards paid out to others.

Are there more accurate ways to track spend? Yes, but I'm not going to a cash only system and maintain a monthly journal to track EVERY penny earned and spent like my parents did back in the day. The monthly CC statement works well for me.

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